Correlation Between Adecco and Futuris

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

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

Diversification Opportunities for Adecco and Futuris

-0.35

Correlation Coefficient

Adecco  Futuris

Very good diversification

The 3 months correlation between Adecco and Futuris is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group and Futuris Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Futuris Company and Adecco 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 Adecco Group are associated (or correlated) with Futuris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Futuris Company has no effect on the direction of Adecco i.e., Adecco and Futuris go up and down completely randomly.

Pair Corralation between Adecco and Futuris

Assuming the 90 days horizon Adecco Group is expected to generate 0.32 times more return on investment than Futuris. However, Adecco Group is 3.14 times less risky than Futuris. It trades about 0.17 of its potential returns per unit of risk. Futuris Company is currently generating about 0.05 per unit of risk. If you would invest  1,225  in Adecco Group on December 21, 2024 and sell it today you would earn a total of  372.00  from holding Adecco Group or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Adecco Group  vs.  Futuris Company

Adecco Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adecco Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Adecco showed solid returns over the last few months and may actually be approaching a breakup point.

Futuris Company

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Adecco and Futuris

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

The idea behind Adecco Group and Futuris Company 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.