Correlation Between Vera Therapeutics and Adecco Group

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

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

Diversification Opportunities for Vera Therapeutics and Adecco Group

0.33

Correlation Coefficient

Vera Therapeutics  Adecco Group

Weak diversification

The 3 months correlation between Vera and Adecco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Vera Therapeutics 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 Vera Therapeutics 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 Vera Therapeutics 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 Vera Therapeutics i.e., Vera Therapeutics and Adecco Group go up and down completely randomly.

Pair Corralation between Vera Therapeutics and Adecco Group

Given the investment horizon of 90 days Vera Therapeutics is expected to generate 7.42 times less return on investment than Adecco Group. In addition to that, Vera Therapeutics is 1.16 times more volatile than Adecco Group AG. It trades about 0.04 of its total potential returns per unit of risk. Adecco Group AG is currently generating about 0.32 per unit of volatility. If you would invest  3,290  in Adecco Group AG on February 22, 2024 and sell it today you would earn a total of  688.00  from holding Adecco Group AG or generate 20.91% return on investment over 90 days.

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

Vera Therapeutics  vs.  Adecco Group AG

Vera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vera Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Adecco Group AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vera Therapeutics and Adecco Group

The main advantage of trading using opposite Vera Therapeutics and Adecco Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vera Therapeutics 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.

The idea behind Vera Therapeutics and Adecco Group AG 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.