Correlation Between Mastech Holdings and Kforce

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

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

Diversification Opportunities for Mastech Holdings and Kforce

-0.04

Correlation Coefficient

Mastech Holdings  Kforce

Good diversification

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

Pair Corralation between Mastech Holdings and Kforce

Considering the 90-day investment horizon Mastech Holdings is expected to generate 2.86 times more return on investment than Kforce. However, Mastech Holdings is 2.86 times more volatile than Kforce Inc. It trades about 0.14 of its potential returns per unit of risk. Kforce Inc is currently generating about -0.05 per unit of risk. If you would invest  1,012  in Mastech Holdings on August 31, 2024 and sell it today you would earn a total of  479.00  from holding Mastech Holdings or generate 47.33% return on investment over 90 days.

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

Mastech Holdings  vs.  Kforce Inc

Mastech Holdings

Risk-Adjusted Performance

11 of 100

Good

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

Kforce Inc

Risk-Adjusted Performance

0 of 100

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 rather sound basic indicators, Kforce is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Mastech Holdings and Kforce

The main advantage of trading using opposite Mastech Holdings and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mastech Holdings 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 Mastech Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.