Correlation Between Randstad Holdings and Recruit Holdings

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

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

Diversification Opportunities for Randstad Holdings and Recruit Holdings

-0.49

Correlation Coefficient

Randstad Holdings  Recruit Holdings

Very good diversification

The 3 months correlation between Randstad and Recruit is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Randstad Holdings NV and Recruit Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recruit Holdings and Randstad 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 Randstad Holdings NV are associated (or correlated) with Recruit Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Recruit Holdings has no effect on the direction of Randstad Holdings i.e., Randstad Holdings and Recruit Holdings go up and down completely randomly.

Pair Corralation between Randstad Holdings and Recruit Holdings

Assuming the 90 days horizon Randstad Holdings NV is expected to under-perform the Recruit Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Randstad Holdings NV is 1.19 times less risky than Recruit Holdings. The pink sheet trades about -0.12 of its potential returns per unit of risk. The Recruit Holdings Co is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  1,342  in Recruit Holdings Co on September 28, 2024 and sell it today you would earn a total of  84.00  from holding Recruit Holdings Co or generate 6.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Randstad Holdings NV  vs.  Recruit Holdings Co

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 unfluctuating performance in the last few months, the Stock's forward-looking indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Recruit Holdings

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Recruit Holdings Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Recruit Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Randstad Holdings and Recruit Holdings

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

The idea behind Randstad Holdings NV and Recruit Holdings Co 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.