Correlation Between Sika AG and Adecco Group
Can any of the company-specific risk be diversified away by investing in both Sika AG 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 Sika AG and Adecco Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sika AG and Adecco Group AG, you can compare the effects of market volatilities on Sika AG 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 Sika AG with a short position of Adecco Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sika AG and Adecco Group.
Diversification Opportunities for Sika AG and Adecco Group
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sika and Adecco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sika 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 Sika AG 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 Sika 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 Sika AG i.e., Sika AG and Adecco Group go up and down completely randomly.
Pair Corralation between Sika AG and Adecco Group
Assuming the 90 days trading horizon Sika AG is expected to under-perform the Adecco Group. But the stock apears to be less risky and, when comparing its historical volatility, Sika AG is 1.17 times less risky than Adecco Group. The stock trades about -0.13 of its potential returns per unit of risk. The Adecco Group AG is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,416 in Adecco Group AG on September 13, 2024 and sell it today you would lose (30.00) from holding Adecco Group AG or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sika AG vs. Adecco Group AG
Performance |
| Timeline |
| Sika AG |
| Adecco Group AG |
Sika AG and Adecco Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sika AG and Adecco Group
The main advantage of trading using opposite Sika AG and Adecco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sika AG 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.| Sika AG vs. Lonza Group AG | Sika AG vs. Givaudan SA | Sika AG vs. Geberit AG | Sika AG vs. Partners Group Holding |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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