Correlation Between Randstad and TKH Group
Can any of the company-specific risk be diversified away by investing in both Randstad and TKH 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 Randstad and TKH Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Randstad NV and TKH Group NV, you can compare the effects of market volatilities on Randstad and TKH 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 Randstad with a short position of TKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Randstad and TKH Group.
Diversification Opportunities for Randstad and TKH Group
Poor diversification
The 3 months correlation between Randstad and TKH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Randstad NV and TKH Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKH Group NV and Randstad 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 NV are associated (or correlated) with TKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKH Group NV has no effect on the direction of Randstad i.e., Randstad and TKH Group go up and down completely randomly.
Pair Corralation between Randstad and TKH Group
Assuming the 90 days trading horizon Randstad NV is expected to under-perform the TKH Group. But the stock apears to be less risky and, when comparing its historical volatility, Randstad NV is 1.11 times less risky than TKH Group. The stock trades about -0.05 of its potential returns per unit of risk. The TKH Group NV is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 3,611 in TKH Group NV on September 2, 2024 and sell it today you would lose (533.00) from holding TKH Group NV or give up 14.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Randstad NV vs. TKH Group NV
Performance |
| Timeline |
| Randstad NV |
| TKH Group NV |
Randstad and TKH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Randstad and TKH Group
The main advantage of trading using opposite Randstad and TKH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad position performs unexpectedly, TKH 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 TKH Group will offset losses from the drop in TKH Group's long position.| Randstad vs. Akzo Nobel NV | Randstad vs. Koninklijke KPN NV | Randstad vs. Aegon NV | Randstad vs. Wolters Kluwer NV |
| TKH Group vs. Aalberts Industries NV | TKH Group vs. BE Semiconductor Industries | TKH Group vs. AMG Advanced Metallurgical | TKH Group vs. Koninklijke Vopak NV |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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