Correlation Between Guangdong Investment and Addus HomeCare
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment and Addus HomeCare at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guangdong Investment and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and Addus HomeCare, you can compare the effects of market volatilities on Guangdong Investment and Addus HomeCare and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guangdong Investment with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and Addus HomeCare.
Diversification Opportunities for Guangdong Investment and Addus HomeCare
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Guangdong and Addus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Guangdong Investment is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guangdong Investment Limited are associated (or correlated) with Addus HomeCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addus HomeCare has no effect on the direction of Guangdong Investment i.e., Guangdong Investment and Addus HomeCare go up and down completely randomly.
Pair Corralation between Guangdong Investment and Addus HomeCare
Assuming the 90 days horizon Guangdong Investment Limited is expected to generate 1.81 times more return on investment than Addus HomeCare. However, Guangdong Investment is 1.81 times more volatile than Addus HomeCare. It trades about 0.52 of its potential returns per unit of risk. Addus HomeCare is currently generating about 0.13 per unit of risk. If you would invest 55.00 in Guangdong Investment Limited on September 24, 2024 and sell it today you would earn a total of 21.00 from holding Guangdong Investment Limited or generate 38.18% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Guangdong Investment Limited vs. Addus HomeCare
Performance |
Timeline |
Guangdong Investment |
Addus HomeCare |
Guangdong Investment and Addus HomeCare Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Guangdong Investment and Addus HomeCare
The main advantage of trading using opposite Guangdong Investment and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment position performs unexpectedly, Addus HomeCare can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Addus HomeCare will offset losses from the drop in Addus HomeCare's long position.Guangdong Investment vs. Addus HomeCare | Guangdong Investment vs. THAI BEVERAGE | Guangdong Investment vs. Corporate Office Properties | Guangdong Investment vs. bet at home AG |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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