Correlation Between Alight and Kforce

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

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

Diversification Opportunities for Alight and Kforce

0.61

Correlation Coefficient

Alight  Kforce

Poor diversification

The 3 months correlation between Alight and Kforce is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Alight Inc and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Alight 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 Alight Inc are associated (or correlated) with Kforce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kforce Inc has no effect on the direction of Alight i.e., Alight and Kforce go up and down completely randomly.

Pair Corralation between Alight and Kforce

Given the investment horizon of 90 days Alight Inc is expected to under-perform the Kforce. In addition to that, Alight is 1.35 times more volatile than Kforce Inc. It trades about -0.02 of its total potential returns per unit of risk. Kforce Inc is currently generating about 0.01 per unit of volatility. If you would invest  5,364  in Kforce Inc on October 13, 2024 and sell it today you would earn a total of  12.00  from holding Kforce Inc or generate 0.22% return on investment over 90 days.

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

Alight Inc  vs.  Kforce Inc

Alight Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alight Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Kforce Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kforce Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Kforce is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Alight and Kforce

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

The idea behind Alight Inc and Kforce Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.