Correlation Between Futuris and Kforce

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

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

Diversification Opportunities for Futuris and Kforce

-0.49

Correlation Coefficient

Futuris  Kforce

Very good diversification

The 3 months correlation between Futuris and Kforce is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Futuris Company and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Futuris 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 Futuris Company 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 Futuris i.e., Futuris and Kforce go up and down completely randomly.

Pair Corralation between Futuris and Kforce

Given the investment horizon of 90 days Futuris Company is expected to generate 5.1 times more return on investment than Kforce. However, Futuris is 5.1 times more volatile than Kforce Inc. It trades about 0.07 of its potential returns per unit of risk. Kforce Inc is currently generating about -0.16 per unit of risk. If you would invest  1.51  in Futuris Company on November 20, 2024 and sell it today you would earn a total of  0.29  from holding Futuris Company or generate 19.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.16%
Values	Daily Returns

Futuris Company  vs.  Kforce Inc

Futuris Company

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Futuris Company are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Futuris unveiled 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 inconsistent performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Futuris and Kforce

The main advantage of trading using opposite Futuris and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Futuris 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 Futuris Company 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.