Correlation Between Clariant and Adecco Group
Can any of the company-specific risk be diversified away by investing in both Clariant and Adecco Group 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 Clariant and Adecco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clariant AG and Adecco Group AG, you can compare the effects of market volatilities on Clariant and Adecco Group 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 Clariant with a short position of Adecco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clariant and Adecco Group.
Diversification Opportunities for Clariant and Adecco Group
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Clariant and Adecco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Clariant AG and Adecco Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adecco Group AG and Clariant 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 Clariant AG are associated (or correlated) with Adecco Group. 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 AG has no effect on the direction of Clariant i.e., Clariant and Adecco Group go up and down completely randomly.
Pair Corralation between Clariant and Adecco Group
Assuming the 90 days trading horizon Clariant AG is expected to generate 1.12 times more return on investment than Adecco Group. However, Clariant is 1.12 times more volatile than Adecco Group AG. It trades about -0.3 of its potential returns per unit of risk. Adecco Group AG is currently generating about -0.55 per unit of risk. If you would invest 1,237 in Clariant AG on August 25, 2024 and sell it today you would lose (145.00) from holding Clariant AG or give up 11.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Clariant AG vs. Adecco Group AG
Performance |
| Timeline |
| Clariant AG |
| Adecco Group AG |
Clariant and Adecco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clariant and Adecco Group
The main advantage of trading using opposite Clariant and Adecco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clariant position performs unexpectedly, Adecco Group 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 Group will offset losses from the drop in Adecco Group's long position.The idea behind Clariant AG and Adecco Group AG 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.| Adecco Group vs. Swisscom AG | Adecco Group vs. Swiss Life Holding | Adecco Group vs. Swiss Re AG | Adecco Group vs. ABB |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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