Correlation Between GEE and Kforce

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

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

Diversification Opportunities for GEE and Kforce

0.27

Correlation Coefficient

GEE  Kforce

Modest diversification

The 3 months correlation between GEE and Kforce is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding GEE Group and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and GEE 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 GEE Group 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 GEE i.e., GEE and Kforce go up and down completely randomly.

Pair Corralation between GEE and Kforce

Considering the 90-day investment horizon GEE Group is expected to generate 3.6 times more return on investment than Kforce. However, GEE is 3.6 times more volatile than Kforce Inc. It trades about 0.01 of its potential returns per unit of risk. Kforce Inc is currently generating about -0.12 per unit of risk. If you would invest  23.00  in GEE Group on December 20, 2024 and sell it today you would lose (1.58) from holding GEE Group or give up 6.87% of portfolio value over 90 days.

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

GEE Group  vs.  Kforce Inc

GEE Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days GEE Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GEE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 GEE and Kforce

The main advantage of trading using opposite GEE and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEE 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 GEE Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.