Correlation Between Hudson Global and Kforce

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

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

Diversification Opportunities for Hudson Global and Kforce

-0.39

Correlation Coefficient

Hudson Global  Kforce

Very good diversification

The 3 months correlation between Hudson and Kforce is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Global and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Hudson Global 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 Hudson Global 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 Hudson Global i.e., Hudson Global and Kforce go up and down completely randomly.

Pair Corralation between Hudson Global and Kforce

Given the investment horizon of 90 days Hudson Global is expected to under-perform the Kforce. In addition to that, Hudson Global is 1.66 times more volatile than Kforce Inc. It trades about -0.02 of its total potential returns per unit of risk. Kforce Inc is currently generating about 0.04 per unit of volatility. If you would invest  5,319  in Kforce Inc on February 14, 2024 and sell it today you would earn a total of  1,099  from holding Kforce Inc or generate 20.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.71%
Values	Daily Returns

Hudson Global  vs.  Kforce Inc

Hudson Global

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Hudson Global are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Hudson Global displayed 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 Hudson Global and Kforce

The main advantage of trading using opposite Hudson Global and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Global 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 Hudson Global 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.