Correlation Between Randstad and NN Group

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

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

Diversification Opportunities for Randstad and NN Group

0.24

Correlation Coefficient

Randstad  NN Group

Modest diversification

The 3 months correlation between Randstad and NN Group is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Randstad NV and NN Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Group NV and Randstad 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 Randstad NV are associated (or correlated) with NN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Group NV has no effect on the direction of Randstad i.e., Randstad and NN Group go up and down completely randomly.

Pair Corralation between Randstad and NN Group

Assuming the 90 days trading horizon Randstad NV is expected to generate 1.97 times more return on investment than NN Group. However, Randstad is 1.97 times more volatile than NN Group NV. It trades about 0.0 of its potential returns per unit of risk. NN Group NV is currently generating about -0.03 per unit of risk. If you would invest  4,215  in Randstad NV on August 31, 2024 and sell it today you would lose (53.00) from holding Randstad NV or give up 1.26% of portfolio value over 90 days.

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

Randstad NV  vs.  NN Group NV

Randstad NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Randstad NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Randstad is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NN Group is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Randstad and NN Group

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

The idea behind Randstad NV and NN Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.