Correlation Between Acadia Healthcare and Kemper

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

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

Diversification Opportunities for Acadia Healthcare and Kemper

0.34

Correlation Coefficient

Acadia Healthcare  Kemper

Weak diversification

The 3 months correlation between Acadia and Kemper is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Acadia Healthcare and Kemper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kemper and Acadia Healthcare 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 Acadia Healthcare are associated (or correlated) with Kemper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kemper has no effect on the direction of Acadia Healthcare i.e., Acadia Healthcare and Kemper go up and down completely randomly.

Pair Corralation between Acadia Healthcare and Kemper

Assuming the 90 days horizon Acadia Healthcare is expected to generate 2.2 times more return on investment than Kemper. However, Acadia Healthcare is 2.2 times more volatile than Kemper. It trades about 0.03 of its potential returns per unit of risk. Kemper is currently generating about 0.03 per unit of risk. If you would invest  1,890  in Acadia Healthcare on April 23, 2025 and sell it today you would earn a total of  70.00  from holding Acadia Healthcare or generate 3.7% return on investment over 90 days.

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

Acadia Healthcare  vs.  Kemper

Acadia Healthcare

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Acadia Healthcare are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Acadia Healthcare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Kemper

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kemper are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kemper is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Acadia Healthcare and Kemper

The main advantage of trading using opposite Acadia Healthcare and Kemper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acadia Healthcare position performs unexpectedly, Kemper 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 Kemper will offset losses from the drop in Kemper's long position.

The idea behind Acadia Healthcare and Kemper 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.