Correlation Between Addus HomeCare and Chuangs China

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

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

Diversification Opportunities for Addus HomeCare and Chuangs China

0.16

Correlation Coefficient

Addus HomeCare  Chuangs China

Average diversification

The 3 months correlation between Addus and Chuangs is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and Addus HomeCare 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 Addus HomeCare are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Chuangs China go up and down completely randomly.

Pair Corralation between Addus HomeCare and Chuangs China

Assuming the 90 days horizon Addus HomeCare is expected to under-perform the Chuangs China. But the stock apears to be less risky and, when comparing its historical volatility, Addus HomeCare is 1.8 times less risky than Chuangs China. The stock trades about -0.25 of its potential returns per unit of risk. The Chuangs China Investments is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1.25  in Chuangs China Investments on April 20, 2025 and sell it today you would lose (0.05) from holding Chuangs China Investments or give up 4.0% of portfolio value over 90 days.

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

Addus HomeCare  vs.  Chuangs China Investments

Addus HomeCare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Addus HomeCare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Chuangs China Investments

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chuangs China Investments are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Chuangs China reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Addus HomeCare and Chuangs China

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

The idea behind Addus HomeCare and Chuangs China Investments 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.