Correlation Between Adecco and Randstad Holdings

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

By analyzing existing cross correlation between Adecco Group and Randstad Holdings NV, you can compare the effects of market volatilities on Adecco and Randstad Holdings 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 Randstad Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecco and Randstad Holdings.

Diversification Opportunities for Adecco and Randstad Holdings

0.95

Correlation Coefficient

Adecco  Randstad Holdings

Almost no diversification

The 3 months correlation between Adecco and Randstad is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings 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 Randstad Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad Holdings has no effect on the direction of Adecco i.e., Adecco and Randstad Holdings go up and down completely randomly.

Pair Corralation between Adecco and Randstad Holdings

Assuming the 90 days horizon Adecco Group is expected to generate 1.1 times more return on investment than Randstad Holdings. However, Adecco is 1.1 times more volatile than Randstad Holdings NV. It trades about -0.03 of its potential returns per unit of risk. Randstad Holdings NV is currently generating about -0.03 per unit of risk. If you would invest  1,619  in Adecco Group on October 23, 2024 and sell it today you would lose (439.00) from holding Adecco Group or give up 27.12% of portfolio value over 90 days.

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

Adecco Group  vs.  Randstad Holdings NV

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Randstad Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randstad Holdings NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's forward-looking indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Adecco and Randstad Holdings

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

The idea behind Adecco Group and Randstad Holdings NV 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.