Correlation Between EPAM Systems and Kyndryl Holdings

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

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

Diversification Opportunities for EPAM Systems and Kyndryl Holdings

0.61

Correlation Coefficient

EPAM Systems  Kyndryl Holdings

Poor diversification

The 3 months correlation between EPAM and Kyndryl is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between EPAM Systems and Kyndryl Holdings

Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Kyndryl Holdings. In addition to that, EPAM Systems is 1.0 times more volatile than Kyndryl Holdings. It trades about -0.18 of its total potential returns per unit of risk. Kyndryl Holdings is currently generating about 0.02 per unit of volatility. If you would invest  3,499  in Kyndryl Holdings on December 24, 2024 and sell it today you would earn a total of  33.00  from holding Kyndryl Holdings or generate 0.94% return on investment over 90 days.

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

EPAM Systems  vs.  Kyndryl Holdings

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kyndryl Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 EPAM Systems and Kyndryl Holdings

The main advantage of trading using opposite EPAM Systems and Kyndryl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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 EPAM Systems 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.