Correlation Between Sodexo PK and Randstad Holdings

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

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

Diversification Opportunities for Sodexo PK and Randstad Holdings

-0.33

Correlation Coefficient

Sodexo PK  Randstad Holdings

Very good diversification

The 3 months correlation between Sodexo and Randstad is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings and Sodexo PK 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 Sodexo PK 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 Sodexo PK i.e., Sodexo PK and Randstad Holdings go up and down completely randomly.

Pair Corralation between Sodexo PK and Randstad Holdings

Assuming the 90 days horizon Sodexo PK is expected to under-perform the Randstad Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sodexo PK is 1.21 times less risky than Randstad Holdings. The pink sheet trades about -0.08 of its potential returns per unit of risk. The Randstad Holdings NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,345  in Randstad Holdings NV on September 5, 2024 and sell it today you would lose (139.00) from holding Randstad Holdings NV or give up 5.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Sodexo PK  vs.  Randstad Holdings NV

Sodexo PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sodexo PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains 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 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 Sodexo PK and Randstad Holdings

The main advantage of trading using opposite Sodexo PK and Randstad Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK 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 Sodexo PK 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.