Correlation Between Recruit Holdings and Trucept

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

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

Diversification Opportunities for Recruit Holdings and Trucept

-0.5

Correlation Coefficient

Recruit Holdings  Trucept

Very good diversification

The 3 months correlation between Recruit and Trucept is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Recruit Holdings Co and Trucept in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trucept and Recruit 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 Recruit Holdings Co 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 Recruit Holdings i.e., Recruit Holdings and Trucept go up and down completely randomly.

Pair Corralation between Recruit Holdings and Trucept

Assuming the 90 days horizon Recruit Holdings Co is expected to under-perform the Trucept. But the pink sheet apears to be less risky and, when comparing its historical volatility, Recruit Holdings Co is 8.2 times less risky than Trucept. The pink sheet trades about -0.19 of its potential returns per unit of risk. The Trucept is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4.20  in Trucept on October 10, 2024 and sell it today you would lose (0.25) from holding Trucept or give up 5.95% of portfolio value over 90 days.

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

Recruit Holdings Co  vs.  Trucept

Recruit Holdings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Recruit Holdings Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Recruit Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Trucept

Risk-Adjusted Performance

5 of 100

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 Recruit Holdings and Trucept

The main advantage of trading using opposite Recruit Holdings and Trucept positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Recruit 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 Recruit Holdings Co 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.