Correlation Between Huaxia Eye and Addus HomeCare

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Can any of the company-specific risk be diversified away by investing in both Huaxia Eye 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 Huaxia Eye and Addus HomeCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Huaxia Eye Hospital and Addus HomeCare, you can compare the effects of market volatilities on Huaxia Eye 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 Huaxia Eye with a short position of Addus HomeCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huaxia Eye and Addus HomeCare.

Diversification Opportunities for Huaxia Eye and Addus HomeCare

-0.43
  Correlation Coefficient

Very good diversification

The 3 months correlation between Huaxia and Addus is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Huaxia Eye Hospital and Addus HomeCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addus HomeCare and Huaxia Eye 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 Huaxia Eye Hospital 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 Huaxia Eye i.e., Huaxia Eye and Addus HomeCare go up and down completely randomly.

Pair Corralation between Huaxia Eye and Addus HomeCare

Assuming the 90 days trading horizon Huaxia Eye Hospital is expected to generate 0.81 times more return on investment than Addus HomeCare. However, Huaxia Eye Hospital is 1.24 times less risky than Addus HomeCare. It trades about -0.01 of its potential returns per unit of risk. Addus HomeCare is currently generating about -0.03 per unit of risk. If you would invest  2,080  in Huaxia Eye Hospital on August 18, 2025 and sell it today you would lose (39.00) from holding Huaxia Eye Hospital or give up 1.87% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy92.31%
ValuesDaily Returns

Huaxia Eye Hospital  vs.  Addus HomeCare

 Performance 
       Timeline  
Huaxia Eye Hospital 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Huaxia Eye Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Huaxia Eye is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Addus HomeCare 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Addus HomeCare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Huaxia Eye and Addus HomeCare Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Huaxia Eye and Addus HomeCare

The main advantage of trading using opposite Huaxia Eye and Addus HomeCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huaxia Eye 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 Huaxia Eye Hospital 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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