Correlation Between Advanced Medical and Addus HomeCare

Can any of the company-specific risk be diversified away by investing in both Advanced Medical 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 Advanced Medical and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Advanced Medical Solutions and Addus HomeCare, you can compare the effects of market volatilities on Advanced Medical 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 Advanced Medical with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Medical and Addus HomeCare.

Diversification Opportunities for Advanced Medical and Addus HomeCare

0.08

Correlation Coefficient

Advanced Medical  Addus HomeCare

Significant diversification

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

Pair Corralation between Advanced Medical and Addus HomeCare

Assuming the 90 days trading horizon Advanced Medical is expected to generate 3.67 times less return on investment than Addus HomeCare. In addition to that, Advanced Medical is 1.52 times more volatile than Addus HomeCare. It trades about 0.02 of its total potential returns per unit of risk. Addus HomeCare is currently generating about 0.12 per unit of volatility. If you would invest  8,100  in Addus HomeCare on March 17, 2025 and sell it today you would earn a total of  1,500  from holding Addus HomeCare or generate 18.52% return on investment over 90 days.

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

Advanced Medical Solutions  vs.  Addus HomeCare

Advanced Medical Sol

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Medical Solutions are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Advanced Medical is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Addus HomeCare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addus HomeCare reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Advanced Medical and Addus HomeCare

The main advantage of trading using opposite Advanced Medical and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Medical 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 Advanced Medical Solutions 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.