Correlation Between BLUESCOPE STEEL and Kforce

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

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

Diversification Opportunities for BLUESCOPE STEEL and Kforce

0.04

Correlation Coefficient

BLUESCOPE STEEL  Kforce

Significant diversification

The 3 months correlation between BLUESCOPE and Kforce is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding BLUESCOPE STEEL and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 BLUESCOPE STEEL i.e., BLUESCOPE STEEL and Kforce go up and down completely randomly.

Pair Corralation between BLUESCOPE STEEL and Kforce

Assuming the 90 days trading horizon BLUESCOPE STEEL is expected to under-perform the Kforce. In addition to that, BLUESCOPE STEEL is 1.43 times more volatile than Kforce Inc. It trades about -0.12 of its total potential returns per unit of risk. Kforce Inc is currently generating about 0.03 per unit of volatility. If you would invest  5,215  in Kforce Inc on October 3, 2024 and sell it today you would earn a total of  135.00  from holding Kforce Inc or generate 2.59% return on investment over 90 days.

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

BLUESCOPE STEEL  vs.  Kforce Inc

BLUESCOPE STEEL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BLUESCOPE STEEL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Kforce Inc

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kforce Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Kforce is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with BLUESCOPE STEEL and Kforce

The main advantage of trading using opposite BLUESCOPE STEEL and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BLUESCOPE STEEL 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 BLUESCOPE STEEL 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.