Correlation Between Kyndryl Holdings and Ovation Science

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

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

Diversification Opportunities for Kyndryl Holdings and Ovation Science

-0.8

Correlation Coefficient

Kyndryl Holdings  Ovation Science

Pay attention - limited upside

The 3 months correlation between Kyndryl and Ovation is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Ovation Science in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ovation Science 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 Ovation Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ovation Science has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Ovation Science go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Ovation Science

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 25.56 times less return on investment than Ovation Science. But when comparing it to its historical volatility, Kyndryl Holdings is 22.36 times less risky than Ovation Science. It trades about 0.24 of its potential returns per unit of risk. Ovation Science is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1.01  in Ovation Science on October 8, 2024 and sell it today you would earn a total of  2.99  from holding Ovation Science or generate 296.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Kyndryl Holdings  vs.  Ovation Science

Kyndryl Holdings

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 19 (%) 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.

Ovation Science

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ovation Science are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ovation Science reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and Ovation Science

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

The idea behind Kyndryl Holdings and Ovation Science 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 Anywhere module to track or share privately all of your investments from the convenience of any device.