Correlation Between Randstad Holdings and Kforce

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

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

Diversification Opportunities for Randstad Holdings and Kforce

0.05

Correlation Coefficient

Randstad Holdings  Kforce

Significant diversification

The 3 months correlation between Randstad and Kforce is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Randstad Holdings NV and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Randstad 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 Randstad Holdings NV 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 Randstad Holdings i.e., Randstad Holdings and Kforce go up and down completely randomly.

Pair Corralation between Randstad Holdings and Kforce

Assuming the 90 days horizon Randstad Holdings NV is expected to generate 1.52 times more return on investment than Kforce. However, Randstad Holdings is 1.52 times more volatile than Kforce Inc. It trades about 0.06 of its potential returns per unit of risk. Kforce Inc is currently generating about -0.13 per unit of risk. If you would invest  2,086  in Randstad Holdings NV on December 30, 2024 and sell it today you would earn a total of  156.00  from holding Randstad Holdings NV or generate 7.48% return on investment over 90 days.

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

Randstad Holdings NV  vs.  Kforce Inc

Randstad Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Randstad Holdings NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile forward-looking indicators, Randstad Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Randstad Holdings and Kforce

The main advantage of trading using opposite Randstad Holdings and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Randstad 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 Randstad Holdings NV 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.