Correlation Between Kyndryl Holdings and BigBearai Holdings

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

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

Diversification Opportunities for Kyndryl Holdings and BigBearai Holdings

0.89

Correlation Coefficient

Kyndryl Holdings  BigBearai Holdings

Very poor diversification

The 3 months correlation between Kyndryl and BigBearai is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and BigBearai Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BigBearai Holdings and Kyndryl Holdings 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 Kyndryl Holdings are associated (or correlated) with BigBearai Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BigBearai Holdings has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and BigBearai Holdings go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and BigBearai Holdings

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.27 times less return on investment than BigBearai Holdings. But when comparing it to its historical volatility, Kyndryl Holdings is 2.0 times less risky than BigBearai Holdings. It trades about 0.24 of its potential returns per unit of risk. BigBearai Holdings is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  144.00  in BigBearai Holdings on September 1, 2024 and sell it today you would earn a total of  85.00  from holding BigBearai Holdings or generate 59.03% return on investment over 90 days.

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

Kyndryl Holdings  vs.  BigBearai Holdings

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 unsteady fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

BigBearai Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BigBearai Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, BigBearai Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and BigBearai Holdings

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

The idea behind Kyndryl Holdings and BigBearai 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.