Correlation Between Alight and Korn Ferry

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

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

Diversification Opportunities for Alight and Korn Ferry

0.82

Correlation Coefficient

Alight  Korn Ferry

Very poor diversification

The 3 months correlation between Alight and Korn is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alight Inc and Korn Ferry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korn Ferry 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 Korn Ferry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korn Ferry has no effect on the direction of Alight i.e., Alight and Korn Ferry go up and down completely randomly.

Pair Corralation between Alight and Korn Ferry

Given the investment horizon of 90 days Alight Inc is expected to under-perform the Korn Ferry. But the stock apears to be less risky and, when comparing its historical volatility, Alight Inc is 1.44 times less risky than Korn Ferry. The stock trades about -0.47 of its potential returns per unit of risk. The Korn Ferry is currently generating about -0.33 of returns per unit of risk over similar time horizon. If you would invest  7,896  in Korn Ferry on September 27, 2024 and sell it today you would lose (1,097) from holding Korn Ferry or give up 13.89% of portfolio value over 90 days.

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

Alight Inc  vs.  Korn Ferry

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 comparatively stable forward indicators, Alight is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Korn Ferry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korn Ferry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Alight and Korn Ferry

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

The idea behind Alight Inc and Korn Ferry 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.