Correlation Between Kyndryl Holdings and Solstice Gold

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

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

Diversification Opportunities for Kyndryl Holdings and Solstice Gold

-0.28

Correlation Coefficient

Kyndryl Holdings  Solstice Gold

Very good diversification

The 3 months correlation between Kyndryl and Solstice is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Solstice Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstice Gold Corp 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 Solstice Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstice Gold Corp has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Solstice Gold go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and Solstice Gold

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to generate 5.36 times less return on investment than Solstice Gold. But when comparing it to its historical volatility, Kyndryl Holdings is 14.69 times less risky than Solstice Gold. It trades about 0.27 of its potential returns per unit of risk. Solstice Gold Corp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.05  in Solstice Gold Corp on October 23, 2024 and sell it today you would lose (1.25) from holding Solstice Gold Corp or give up 60.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Kyndryl Holdings  vs.  Solstice Gold Corp

Kyndryl Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 21 (%) 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.

Solstice Gold Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstice Gold Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Solstice Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and Solstice Gold

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

The idea behind Kyndryl Holdings and Solstice Gold Corp 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.