Correlation Between Kyndryl Holdings and Information Services

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

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

Diversification Opportunities for Kyndryl Holdings and Information Services

0.91

Correlation Coefficient

Kyndryl Holdings  Information Services

Almost no diversification

The 3 months correlation between Kyndryl and Information is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Information Services Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Information Services go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Information Services

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 1.4 times more return on investment than Information Services. However, Kyndryl Holdings is 1.4 times more volatile than Information Services Group. It trades about 0.09 of its potential returns per unit of risk. Information Services Group is currently generating about -0.01 per unit of risk. If you would invest  1,158  in Kyndryl Holdings on September 23, 2024 and sell it today you would earn a total of  2,293  from holding Kyndryl Holdings or generate 198.01% return on investment over 90 days.

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

Kyndryl Holdings  vs.  Information Services Group

Kyndryl Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Information Services

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Kyndryl Holdings and Information Services

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

The idea behind Kyndryl Holdings and Information Services Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.