Correlation Between Alibaba Group and Kforce

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

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

Diversification Opportunities for Alibaba Group and Kforce

-0.55

Correlation Coefficient

Alibaba Group  Kforce

Excellent diversification

The 3 months correlation between Alibaba and Kforce is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Group Holding and Kforce Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kforce Inc and Alibaba Group 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 Alibaba Group Holding 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 Alibaba Group i.e., Alibaba Group and Kforce go up and down completely randomly.

Pair Corralation between Alibaba Group and Kforce

Assuming the 90 days horizon Alibaba Group Holding is expected to under-perform the Kforce. In addition to that, Alibaba Group is 2.08 times more volatile than Kforce Inc. It trades about -0.01 of its total potential returns per unit of risk. Kforce Inc is currently generating about 0.0 per unit of volatility. If you would invest  5,364  in Kforce Inc on September 23, 2024 and sell it today you would lose (14.00) from holding Kforce Inc or give up 0.26% of portfolio value over 90 days.

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

Alibaba Group Holding  vs.  Kforce Inc

Alibaba Group Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alibaba Group Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Alibaba Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite nearly stable basic indicators, Kforce is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Alibaba Group and Kforce

The main advantage of trading using opposite Alibaba Group and Kforce positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Group 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 Alibaba Group Holding 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.