Correlation Between Addus HomeCare and Cleanaway Waste

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

By analyzing existing cross correlation between Addus HomeCare and Cleanaway Waste Management, you can compare the effects of market volatilities on Addus HomeCare and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addus HomeCare and Cleanaway Waste.

Diversification Opportunities for Addus HomeCare and Cleanaway Waste

0.38

Correlation Coefficient

Addus HomeCare  Cleanaway Waste

Weak diversification

The 3 months correlation between Addus and Cleanaway is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Addus HomeCare and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Addus HomeCare i.e., Addus HomeCare and Cleanaway Waste go up and down completely randomly.

Pair Corralation between Addus HomeCare and Cleanaway Waste

Assuming the 90 days horizon Addus HomeCare is expected to generate 1.85 times less return on investment than Cleanaway Waste. But when comparing it to its historical volatility, Addus HomeCare is 1.05 times less risky than Cleanaway Waste. It trades about 0.05 of its potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  146.00  in Cleanaway Waste Management on April 25, 2025 and sell it today you would earn a total of  14.00  from holding Cleanaway Waste Management or generate 9.59% return on investment over 90 days.

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

Addus HomeCare  vs.  Cleanaway Waste Management

Addus HomeCare

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Addus HomeCare are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Addus HomeCare is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Cleanaway Waste Mana

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cleanaway Waste Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cleanaway Waste may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Addus HomeCare and Cleanaway Waste

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

The idea behind Addus HomeCare and Cleanaway Waste Management 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.