Correlation Between Hirequest and Randstad Holdings

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

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

Diversification Opportunities for Hirequest and Randstad Holdings

-0.57

Correlation Coefficient

Hirequest  Randstad Holdings

Excellent diversification

The 3 months correlation between Hirequest and Randstad is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hirequest and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and Hirequest 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 Hirequest 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 Hirequest i.e., Hirequest and Randstad Holdings go up and down completely randomly.

Pair Corralation between Hirequest and Randstad Holdings

Considering the 90-day investment horizon Hirequest is expected to generate 1.25 times more return on investment than Randstad Holdings. However, Hirequest is 1.25 times more volatile than Randstad Holdings NV. It trades about 0.08 of its potential returns per unit of risk. Randstad Holdings NV is currently generating about -0.04 per unit of risk. If you would invest  1,402  in Hirequest on August 31, 2024 and sell it today you would earn a total of  147.00  from holding Hirequest or generate 10.49% return on investment over 90 days.

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

Hirequest  vs.  Randstad Holdings NV

Hirequest

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hirequest are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Hirequest may actually be approaching a critical reversion point that can send shares even higher in December 2024.

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 fairly strong forward-looking indicators, Randstad Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hirequest and Randstad Holdings

The main advantage of trading using opposite Hirequest and Randstad Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hirequest 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 Hirequest 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.