Correlation Between TechnoPro Holdings and Adecco

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

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

Diversification Opportunities for TechnoPro Holdings and Adecco

0.7

Correlation Coefficient

TechnoPro Holdings  Adecco

Poor diversification

The 3 months correlation between TechnoPro and Adecco is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TechnoPro Holdings and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and TechnoPro 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 TechnoPro Holdings are associated (or correlated) with Adecco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adecco Group has no effect on the direction of TechnoPro Holdings i.e., TechnoPro Holdings and Adecco go up and down completely randomly.

Pair Corralation between TechnoPro Holdings and Adecco

Assuming the 90 days horizon TechnoPro Holdings is expected to generate 1.56 times less return on investment than Adecco. But when comparing it to its historical volatility, TechnoPro Holdings is 1.84 times less risky than Adecco. It trades about 0.16 of its potential returns per unit of risk. Adecco Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,225  in Adecco Group on December 22, 2024 and sell it today you would earn a total of  282.00  from holding Adecco Group or generate 23.02% return on investment over 90 days.

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

TechnoPro Holdings  vs.  Adecco Group

TechnoPro Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TechnoPro Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, TechnoPro Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Adecco Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adecco Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Adecco showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TechnoPro Holdings and Adecco

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

The idea behind TechnoPro Holdings and Adecco Group 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.