Correlation Between Randstad Holdings and Trucept

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

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

Diversification Opportunities for Randstad Holdings and Trucept

-0.04

Correlation Coefficient

Randstad Holdings  Trucept

Good diversification

The 3 months correlation between Randstad and Trucept is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Randstad Holdings NV and Trucept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trucept and Randstad Holdings 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 Holdings NV are associated (or correlated) with Trucept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trucept has no effect on the direction of Randstad Holdings i.e., Randstad Holdings and Trucept go up and down completely randomly.

Pair Corralation between Randstad Holdings and Trucept

Assuming the 90 days horizon Randstad Holdings is expected to generate 5.74 times less return on investment than Trucept. But when comparing it to its historical volatility, Randstad Holdings NV is 5.21 times less risky than Trucept. It trades about 0.06 of its potential returns per unit of risk. Trucept is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3.99  in Trucept on December 30, 2024 and sell it today you would earn a total of  0.41  from holding Trucept or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

Randstad Holdings NV  vs.  Trucept

Randstad Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Randstad Holdings NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, Randstad Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Trucept

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Trucept are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile technical and fundamental indicators, Trucept reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Randstad Holdings and Trucept

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

The idea behind Randstad Holdings NV and Trucept 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.