Correlation Between Paychex and Korn Ferry

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

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

Diversification Opportunities for Paychex and Korn Ferry

-0.19

Correlation Coefficient

Paychex  Korn Ferry

Good diversification

The 3 months correlation between Paychex and Korn is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Paychex and Korn Ferry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korn Ferry and Paychex 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 Paychex are associated (or correlated) with Korn Ferry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korn Ferry has no effect on the direction of Paychex i.e., Paychex and Korn Ferry go up and down completely randomly.

Pair Corralation between Paychex and Korn Ferry

Given the investment horizon of 90 days Paychex is expected to generate 0.83 times more return on investment than Korn Ferry. However, Paychex is 1.2 times less risky than Korn Ferry. It trades about 0.11 of its potential returns per unit of risk. Korn Ferry is currently generating about 0.02 per unit of risk. If you would invest  13,905  in Paychex on December 28, 2024 and sell it today you would earn a total of  1,278  from holding Paychex or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Paychex  vs.  Korn Ferry

Paychex

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Paychex are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Paychex may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Korn Ferry

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Korn Ferry are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Korn Ferry is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Paychex and Korn Ferry

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

The idea behind Paychex and Korn Ferry 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.

Check out your portfolio center.

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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.