Correlation Between Adecco Group and STHREE PLC

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

By analyzing existing cross correlation between Adecco Group AG and STHREE PLC LS, you can compare the effects of market volatilities on Adecco Group and STHREE PLC 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 Adecco Group with a short position of STHREE PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adecco Group and STHREE PLC.

Diversification Opportunities for Adecco Group and STHREE PLC

0.37

Correlation Coefficient

Adecco Group  STHREE PLC

Weak diversification

The 3 months correlation between Adecco and STHREE is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group AG and STHREE PLC LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STHREE PLC LS and Adecco 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 Adecco Group AG are associated (or correlated) with STHREE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STHREE PLC LS has no effect on the direction of Adecco Group i.e., Adecco Group and STHREE PLC go up and down completely randomly.

Pair Corralation between Adecco Group and STHREE PLC

Assuming the 90 days trading horizon Adecco Group AG is expected to generate 1.36 times more return on investment than STHREE PLC. However, Adecco Group is 1.36 times more volatile than STHREE PLC LS. It trades about 0.12 of its potential returns per unit of risk. STHREE PLC LS is currently generating about 0.02 per unit of risk. If you would invest  1,140  in Adecco Group AG on April 24, 2025 and sell it today you would earn a total of  220.00  from holding Adecco Group AG or generate 19.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Adecco Group AG  vs.  STHREE PLC LS

Adecco Group AG

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Adecco Group AG are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, Adecco Group reported solid returns over the last few months and may actually be approaching a breakup point.

STHREE PLC LS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in STHREE PLC LS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, STHREE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Adecco Group and STHREE PLC

The main advantage of trading using opposite Adecco Group and STHREE PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adecco Group position performs unexpectedly, STHREE PLC 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 STHREE PLC will offset losses from the drop in STHREE PLC's long position.

The idea behind Adecco Group AG and STHREE PLC LS 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.