Correlation Between STHREE PLC and Randstad

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

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

Diversification Opportunities for STHREE PLC and Randstad

0.38

Correlation Coefficient

STHREE PLC  Randstad

Weak diversification

The 3 months correlation between STHREE and Randstad is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding STHREE PLC LS and Randstad NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Randstad NV and STHREE PLC 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 STHREE PLC LS are associated (or correlated) with Randstad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Randstad NV has no effect on the direction of STHREE PLC i.e., STHREE PLC and Randstad go up and down completely randomly.

Pair Corralation between STHREE PLC and Randstad

Assuming the 90 days horizon STHREE PLC is expected to generate 22.33 times less return on investment than Randstad. In addition to that, STHREE PLC is 1.31 times more volatile than Randstad NV. It trades about 0.01 of its total potential returns per unit of risk. Randstad NV is currently generating about 0.2 per unit of volatility. If you would invest  3,526  in Randstad NV on April 25, 2025 and sell it today you would earn a total of  706.00  from holding Randstad NV or generate 20.02% return on investment over 90 days.

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

STHREE PLC LS  vs.  Randstad NV

STHREE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days STHREE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, STHREE PLC is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Randstad NV

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Randstad NV are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Randstad reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with STHREE PLC and Randstad

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

The idea behind STHREE PLC LS and Randstad NV 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.