Correlation Between Kyndryl Holdings and First Community

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

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

Diversification Opportunities for Kyndryl Holdings and First Community

-0.46

Correlation Coefficient

Kyndryl Holdings  First Community

Very good diversification

The 3 months correlation between Kyndryl and First is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and First Community Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Financial 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 First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Financial has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and First Community go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and First Community

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.81 times more return on investment than First Community. However, Kyndryl Holdings is 1.81 times more volatile than First Community Financial. It trades about 0.08 of its potential returns per unit of risk. First Community Financial is currently generating about -0.07 per unit of risk. If you would invest  1,363  in Kyndryl Holdings on October 23, 2024 and sell it today you would earn a total of  2,463  from holding Kyndryl Holdings or generate 180.7% return on investment over 90 days.

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

Kyndryl Holdings  vs.  First Community Financial

Kyndryl Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 21 (%) 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.

First Community Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kyndryl Holdings and First Community

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

The idea behind Kyndryl Holdings and First Community Financial 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.