Correlation Between Television Broadcasts and ADDUS HOMECARE

Can any of the company-specific risk be diversified away by investing in both Television Broadcasts 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 Television Broadcasts and ADDUS HOMECARE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Television Broadcasts Limited and ADDUS HOMECARE, you can compare the effects of market volatilities on Television Broadcasts 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 Television Broadcasts with a short position of ADDUS HOMECARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Television Broadcasts and ADDUS HOMECARE.

Diversification Opportunities for Television Broadcasts and ADDUS HOMECARE

0.08

Correlation Coefficient

Television Broadcasts  ADDUS HOMECARE

Significant diversification

The 3 months correlation between Television and ADDUS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Television Broadcasts Limited and ADDUS HOMECARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADDUS HOMECARE and Television Broadcasts 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 Television Broadcasts 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 Television Broadcasts i.e., Television Broadcasts and ADDUS HOMECARE go up and down completely randomly.

Pair Corralation between Television Broadcasts and ADDUS HOMECARE

Assuming the 90 days trading horizon Television Broadcasts Limited is expected to generate 0.61 times more return on investment than ADDUS HOMECARE. However, Television Broadcasts Limited is 1.64 times less risky than ADDUS HOMECARE. It trades about 0.05 of its potential returns per unit of risk. ADDUS HOMECARE is currently generating about -0.19 per unit of risk. If you would invest  37.00  in Television Broadcasts Limited on December 23, 2024 and sell it today you would earn a total of  2.00  from holding Television Broadcasts Limited or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Television Broadcasts Limited  vs.  ADDUS HOMECARE

Television Broadcasts

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Television Broadcasts Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Television Broadcasts may actually be approaching a critical reversion point that can send shares even higher in April 2025.

ADDUS HOMECARE

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADDUS HOMECARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Television Broadcasts and ADDUS HOMECARE

The main advantage of trading using opposite Television Broadcasts and ADDUS HOMECARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Television Broadcasts 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.

The idea behind Television Broadcasts Limited and ADDUS HOMECARE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.