Correlation Between Kyndryl Holdings and Formula Systems

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

By analyzing existing cross correlation between Kyndryl Holdings and Formula Systems 1985, you can compare the effects of market volatilities on Kyndryl Holdings and Formula Systems 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 Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyndryl Holdings and Formula Systems.

Diversification Opportunities for Kyndryl Holdings and Formula Systems

0.13

Correlation Coefficient

Kyndryl Holdings  Formula Systems

Average diversification

The 3 months correlation between Kyndryl and Formula is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 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 Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Formula Systems go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Formula Systems

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to under-perform the Formula Systems. In addition to that, Kyndryl Holdings is 1.2 times more volatile than Formula Systems 1985. It trades about -0.32 of its total potential returns per unit of risk. Formula Systems 1985 is currently generating about -0.13 per unit of volatility. If you would invest  9,592  in Formula Systems 1985 on December 29, 2024 and sell it today you would lose (598.00) from holding Formula Systems 1985 or give up 6.23% of portfolio value over 90 days.

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

Kyndryl Holdings  vs.  Formula Systems 1985

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 latest unfluctuating performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Formula Systems 1985

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Formula Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kyndryl Holdings and Formula Systems

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

The idea behind Kyndryl Holdings and Formula Systems 1985 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..