Correlation Between Randstad and TONGDAO LIEPGR
Can any of the company-specific risk be diversified away by investing in both Randstad and TONGDAO LIEPGR 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 TONGDAO LIEPGR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Randstad NV and TONGDAO LIEPGR DL 0001, you can compare the effects of market volatilities on Randstad and TONGDAO LIEPGR 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 TONGDAO LIEPGR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Randstad and TONGDAO LIEPGR.
Diversification Opportunities for Randstad and TONGDAO LIEPGR
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Randstad and TONGDAO is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Randstad NV and TONGDAO LIEPGR DL 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TONGDAO LIEPGR DL 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 TONGDAO LIEPGR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TONGDAO LIEPGR DL has no effect on the direction of Randstad i.e., Randstad and TONGDAO LIEPGR go up and down completely randomly.
Pair Corralation between Randstad and TONGDAO LIEPGR
Assuming the 90 days horizon Randstad NV is expected to under-perform the TONGDAO LIEPGR. But the stock apears to be less risky and, when comparing its historical volatility, Randstad NV is 3.2 times less risky than TONGDAO LIEPGR. The stock trades about -0.05 of its potential returns per unit of risk. The TONGDAO LIEPGR DL 0001 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 25.00 in TONGDAO LIEPGR DL 0001 on September 2, 2024 and sell it today you would earn a total of 2.00 from holding TONGDAO LIEPGR DL 0001 or generate 8.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Randstad NV vs. TONGDAO LIEPGR DL 0001
Performance |
| Timeline |
| Randstad NV |
| TONGDAO LIEPGR DL |
Randstad and TONGDAO LIEPGR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Randstad and TONGDAO LIEPGR
The main advantage of trading using opposite Randstad and TONGDAO LIEPGR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad position performs unexpectedly, TONGDAO LIEPGR 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 TONGDAO LIEPGR will offset losses from the drop in TONGDAO LIEPGR's long position.| Randstad vs. Aedas Homes SA | Randstad vs. Tri Pointe Homes | Randstad vs. Sporttotal AG | Randstad vs. DFS Furniture PLC |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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