Correlation Between 3i Group and Recruit Holdings

Can any of the company-specific risk be diversified away by investing in both 3i Group 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 3i Group and Recruit Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3i Group plc and Recruit Holdings Co, you can compare the effects of market volatilities on 3i Group 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 3i Group with a short position of Recruit Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3i Group and Recruit Holdings.

Diversification Opportunities for 3i Group and Recruit Holdings

-0.03

Correlation Coefficient

3i Group  Recruit Holdings

Good diversification

The 3 months correlation between TGOPF and Recruit is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding 3i Group plc and Recruit Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Recruit Holdings and 3i Group 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 3i Group plc 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 3i Group i.e., 3i Group and Recruit Holdings go up and down completely randomly.

Pair Corralation between 3i Group and Recruit Holdings

Assuming the 90 days horizon 3i Group is expected to generate 1.41 times less return on investment than Recruit Holdings. But when comparing it to its historical volatility, 3i Group plc is 1.13 times less risky than Recruit Holdings. It trades about 0.03 of its potential returns per unit of risk. Recruit Holdings Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,159  in Recruit Holdings Co on May 5, 2025 and sell it today you would earn a total of  48.00  from holding Recruit Holdings Co or generate 4.14% return on investment over 90 days.

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

3i Group plc  vs.  Recruit Holdings Co

3i Group plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in 3i Group plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, 3i Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Recruit Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Recruit Holdings Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Recruit 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 3i Group and Recruit Holdings

The main advantage of trading using opposite 3i Group and Recruit Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3i Group 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 3i Group plc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.