Correlation Between Adecco and Reliability Incorporated

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

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

Diversification Opportunities for Adecco and Reliability Incorporated

0.26

Correlation Coefficient

Adecco  Reliability Incorporated

Modest diversification

The 3 months correlation between Adecco and Reliability is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Adecco Group and Reliability Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliability Incorporated and Adecco 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 are associated (or correlated) with Reliability Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliability Incorporated has no effect on the direction of Adecco i.e., Adecco and Reliability Incorporated go up and down completely randomly.

Pair Corralation between Adecco and Reliability Incorporated

If you would invest  5.00  in Reliability Incorporated on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Reliability Incorporated or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Adecco Group  vs.  Reliability Incorporated

Adecco Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adecco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Reliability Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reliability Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Reliability Incorporated is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Adecco and Reliability Incorporated

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

The idea behind Adecco Group and Reliability Incorporated 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.