Correlation Between Kyndryl Holdings and VNET Group

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

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

Diversification Opportunities for Kyndryl Holdings and VNET Group

0.24

Correlation Coefficient

Kyndryl Holdings  VNET Group

Modest diversification

The 3 months correlation between Kyndryl and VNET is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and VNET Group DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VNET Group DRC 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 VNET Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VNET Group DRC has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and VNET Group go up and down completely randomly.

Pair Corralation between Kyndryl Holdings and VNET Group

Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to under-perform the VNET Group. But the stock apears to be less risky and, when comparing its historical volatility, Kyndryl Holdings is 2.78 times less risky than VNET Group. The stock trades about 0.0 of its potential returns per unit of risk. The VNET Group DRC is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  427.00  in VNET Group DRC on December 27, 2024 and sell it today you would earn a total of  463.00  from holding VNET Group DRC or generate 108.43% return on investment over 90 days.

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

Kyndryl Holdings  vs.  VNET Group DRC

Kyndryl Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kyndryl Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Kyndryl Holdings is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

VNET Group DRC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, VNET Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kyndryl Holdings and VNET Group

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

The idea behind Kyndryl Holdings and VNET Group DRC 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.