Correlation Between Knorr-Bremse Aktiengesellscha and Randstad Holdings

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

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

Diversification Opportunities for Knorr-Bremse Aktiengesellscha and Randstad Holdings

0.93

Correlation Coefficient

Knorr-Bremse Aktiengesellscha  Randstad Holdings

Almost no diversification

The 3 months correlation between Knorr-Bremse and Randstad is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Knorr Bremse Aktiengesellschaf and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and Knorr-Bremse Aktiengesellscha 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 Knorr Bremse Aktiengesellschaft 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 Knorr-Bremse Aktiengesellscha i.e., Knorr-Bremse Aktiengesellscha and Randstad Holdings go up and down completely randomly.

Pair Corralation between Knorr-Bremse Aktiengesellscha and Randstad Holdings

Assuming the 90 days horizon Knorr Bremse Aktiengesellschaft is expected to under-perform the Randstad Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Knorr Bremse Aktiengesellschaft is 1.21 times less risky than Randstad Holdings. The pink sheet trades about -0.23 of its potential returns per unit of risk. The Randstad Holdings NV is currently generating about -0.15 of returns per unit of risk over similar time horizon. If you would invest  2,456  in Randstad Holdings NV on October 5, 2024 and sell it today you would lose (404.00) from holding Randstad Holdings NV or give up 16.45% of portfolio value over 90 days.

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

Knorr Bremse Aktiengesellschaf  vs.  Randstad Holdings NV

Knorr-Bremse Aktiengesellscha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knorr Bremse Aktiengesellschaft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 uncertain performance in the last few months, the Stock's forward-looking 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.

Pair Trading with Knorr-Bremse Aktiengesellscha and Randstad Holdings

The main advantage of trading using opposite Knorr-Bremse Aktiengesellscha and Randstad Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knorr-Bremse Aktiengesellscha 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 Knorr Bremse Aktiengesellschaft 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.