Correlation Between TechnoPro Holdings and Randstad Holdings

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

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

Diversification Opportunities for TechnoPro Holdings and Randstad Holdings

0.41

Correlation Coefficient

TechnoPro Holdings  Randstad Holdings

Very weak diversification

The 3 months correlation between TechnoPro and Randstad is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding TechnoPro Holdings and Randstad Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad Holdings 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 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 TechnoPro Holdings i.e., TechnoPro Holdings and Randstad Holdings go up and down completely randomly.

Pair Corralation between TechnoPro Holdings and Randstad Holdings

Assuming the 90 days horizon TechnoPro Holdings is expected to generate 1.25 times more return on investment than Randstad Holdings. However, TechnoPro Holdings is 1.25 times more volatile than Randstad Holdings NV. It trades about -0.03 of its potential returns per unit of risk. Randstad Holdings NV is currently generating about -0.06 per unit of risk. If you would invest  471.00  in TechnoPro Holdings on October 5, 2024 and sell it today you would lose (104.00) from holding TechnoPro Holdings or give up 22.08% of portfolio value over 90 days.

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

TechnoPro Holdings  vs.  Randstad Holdings NV

TechnoPro Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TechnoPro Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, TechnoPro Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 uncertain performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with TechnoPro Holdings and Randstad Holdings

The main advantage of trading using opposite TechnoPro Holdings and Randstad Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TechnoPro Holdings 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 TechnoPro Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.