Correlation Between DXC Technology and Kyndryl Holdings

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

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

Diversification Opportunities for DXC Technology and Kyndryl Holdings

0.59

Correlation Coefficient

DXC Technology  Kyndryl Holdings

Very weak diversification

The 3 months correlation between DXC and Kyndryl is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and DXC Technology 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 DXC Technology Co are associated (or correlated) with Kyndryl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyndryl Holdings has no effect on the direction of DXC Technology i.e., DXC Technology and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between DXC Technology and Kyndryl Holdings

Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the Kyndryl Holdings. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 1.11 times less risky than Kyndryl Holdings. The stock trades about -0.09 of its potential returns per unit of risk. The Kyndryl Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,483  in Kyndryl Holdings on December 27, 2024 and sell it today you would lose (77.00) from holding Kyndryl Holdings or give up 2.21% of portfolio value over 90 days.

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

DXC Technology Co  vs.  Kyndryl Holdings

DXC Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days DXC Technology Co 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.

Kyndryl Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kyndryl Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kyndryl Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with DXC Technology and Kyndryl Holdings

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

The idea behind DXC Technology Co and Kyndryl Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..