Correlation Between Discount Print and Kforce

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

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

Diversification Opportunities for Discount Print and Kforce

0.11

Correlation Coefficient

Discount Print  Kforce

Average diversification

The 3 months correlation between Discount and Kforce is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Discount Print USA and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Discount Print 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 Discount Print USA 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 Discount Print i.e., Discount Print and Kforce go up and down completely randomly.

Pair Corralation between Discount Print and Kforce

Given the investment horizon of 90 days Discount Print USA is expected to generate 18.07 times more return on investment than Kforce. However, Discount Print is 18.07 times more volatile than Kforce Inc. It trades about 0.15 of its potential returns per unit of risk. Kforce Inc is currently generating about -0.12 per unit of risk. If you would invest  0.01  in Discount Print USA on December 29, 2024 and sell it today you would earn a total of  0.01  from holding Discount Print USA or generate 100.0% return on investment over 90 days.

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

Discount Print USA  vs.  Kforce Inc

Discount Print USA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discount Print USA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly sluggish basic indicators, Discount Print demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kforce Inc

Risk-Adjusted Performance

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 latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Discount Print and Kforce

The main advantage of trading using opposite Discount Print and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discount Print 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 Discount Print USA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.