Correlation Between Kyndryl Holdings and CSP

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

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

Diversification Opportunities for Kyndryl Holdings and CSP

0.74

Correlation Coefficient

Kyndryl Holdings  CSP

Poor diversification

The 3 months correlation between Kyndryl and CSP is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and CSP go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and CSP

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, Kyndryl Holdings is 1.57 times less risky than CSP. The stock trades about -0.03 of its potential returns per unit of risk. The CSP Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,553  in CSP Inc on December 27, 2024 and sell it today you would lose (17.00) from holding CSP Inc or give up 1.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Kyndryl Holdings  vs.  CSP Inc

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.

CSP Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, CSP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Kyndryl Holdings and CSP

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

The idea behind Kyndryl Holdings and CSP 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.