Correlation Between Trucept and Adecco

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

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

Diversification Opportunities for Trucept and Adecco

0.36

Correlation Coefficient

Trucept  Adecco

Weak diversification

The 3 months correlation between Trucept and Adecco is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Trucept and Adecco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group and Trucept 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 Trucept 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 Trucept i.e., Trucept and Adecco go up and down completely randomly.

Pair Corralation between Trucept and Adecco

Given the investment horizon of 90 days Trucept is expected to generate 4.96 times more return on investment than Adecco. However, Trucept is 4.96 times more volatile than Adecco Group. It trades about 0.07 of its potential returns per unit of risk. Adecco Group is currently generating about 0.17 per unit of risk. If you would invest  4.50  in Trucept on December 21, 2024 and sell it today you would earn a total of  0.11  from holding Trucept or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Trucept  vs.  Adecco Group

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.

Adecco Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Adecco Group are ranked lower than 13 (%) 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 Trucept and Adecco

The main advantage of trading using opposite Trucept and Adecco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trucept 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 Trucept 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.