Correlation Between Kyndryl Holdings and Greenidge Generation

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

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

Diversification Opportunities for Kyndryl Holdings and Greenidge Generation

0.86

Correlation Coefficient

Kyndryl Holdings  Greenidge Generation

Very poor diversification

The 3 months correlation between Kyndryl and Greenidge is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Greenidge Generation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenidge Generation 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 Greenidge Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenidge Generation has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Greenidge Generation go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Greenidge Generation

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.06 times more return on investment than Greenidge Generation. However, Kyndryl Holdings is 1.06 times more volatile than Greenidge Generation Holdings. It trades about 0.1 of its potential returns per unit of risk. Greenidge Generation Holdings is currently generating about 0.08 per unit of risk. If you would invest  1,891  in Kyndryl Holdings on September 4, 2024 and sell it today you would earn a total of  1,587  from holding Kyndryl Holdings or generate 83.92% 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.  Greenidge Generation Holdings

Kyndryl Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 18 (%) 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.

Greenidge Generation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Greenidge Generation Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal technical and fundamental indicators, Greenidge Generation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and Greenidge Generation

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

The idea behind Kyndryl Holdings and Greenidge Generation 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.