Correlation Between Information Services and Kyndryl Holdings

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

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

Diversification Opportunities for Information Services and Kyndryl Holdings

0.88

Correlation Coefficient

Information Services  Kyndryl Holdings

Very poor diversification

The 3 months correlation between Information and Kyndryl is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and Information Services 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 Information Services Group 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 Information Services i.e., Information Services and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between Information Services and Kyndryl Holdings

Considering the 90-day investment horizon Information Services Group is expected to under-perform the Kyndryl Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Information Services Group is 1.38 times less risky than Kyndryl Holdings. The stock trades about -0.04 of its potential returns per unit of risk. The Kyndryl Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,037  in Kyndryl Holdings on October 2, 2024 and sell it today you would earn a total of  1,416  from holding Kyndryl Holdings or generate 69.51% return on investment over 90 days.

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

Information Services Group  vs.  Kyndryl Holdings

Information Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kyndryl Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Information Services and Kyndryl Holdings

The main advantage of trading using opposite Information Services and Kyndryl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.