Correlation Between Kforce and Amedisys

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Can any of the company-specific risk be diversified away by investing in both Kforce and Amedisys 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 Kforce and Amedisys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kforce Inc and Amedisys, you can compare the effects of market volatilities on Kforce and Amedisys 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 Kforce with a short position of Amedisys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kforce and Amedisys.

Diversification Opportunities for Kforce and Amedisys

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Kforce and Amedisys is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Kforce Inc and Amedisys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amedisys and Kforce 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 Kforce Inc are associated (or correlated) with Amedisys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amedisys has no effect on the direction of Kforce i.e., Kforce and Amedisys go up and down completely randomly.

Pair Corralation between Kforce and Amedisys

Given the investment horizon of 90 days Kforce Inc is expected to generate 2.23 times more return on investment than Amedisys. However, Kforce is 2.23 times more volatile than Amedisys. It trades about 0.01 of its potential returns per unit of risk. Amedisys is currently generating about -0.03 per unit of risk. If you would invest  5,508  in Kforce Inc on September 21, 2024 and sell it today you would earn a total of  127.00  from holding Kforce Inc or generate 2.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kforce Inc  vs.  Amedisys

 Performance 
       Timeline  
Kforce Inc 

Risk-Adjusted Performance

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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.
Amedisys 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Amedisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Kforce and Amedisys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kforce and Amedisys

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

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