Correlation Between Kyndryl Holdings and Nextmart

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

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

Diversification Opportunities for Kyndryl Holdings and Nextmart

-0.37

Correlation Coefficient

Kyndryl Holdings  Nextmart

Very good diversification

The 3 months correlation between Kyndryl and Nextmart is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart 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 Nextmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextmart has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Nextmart go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Nextmart

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 11.1 times less return on investment than Nextmart. But when comparing it to its historical volatility, Kyndryl Holdings is 24.51 times less risky than Nextmart. It trades about 0.34 of its potential returns per unit of risk. Nextmart is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.04  in Nextmart on October 7, 2024 and sell it today you would earn a total of  0.02  from holding Nextmart or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.35%
Values	Daily Returns

Kyndryl Holdings  vs.  Nextmart

Kyndryl Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nextmart

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nextmart are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nextmart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and Nextmart

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

The idea behind Kyndryl Holdings and Nextmart 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.