Correlation Between Occidental and Kyndryl Holdings

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

By analyzing existing cross correlation between Occidental Petroleum 44 and Kyndryl Holdings, you can compare the effects of market volatilities on Occidental and Kyndryl Holdings 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 Occidental with a short position of Kyndryl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Occidental and Kyndryl Holdings.

Diversification Opportunities for Occidental and Kyndryl Holdings

-0.43

Correlation Coefficient

Occidental  Kyndryl Holdings

Very good diversification

The 3 months correlation between Occidental and Kyndryl is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Occidental Petroleum 44 and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and Occidental 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 Occidental Petroleum 44 are associated (or correlated) with Kyndryl Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kyndryl Holdings has no effect on the direction of Occidental i.e., Occidental and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between Occidental and Kyndryl Holdings

Assuming the 90 days trading horizon Occidental Petroleum 44 is expected to generate 0.75 times more return on investment than Kyndryl Holdings. However, Occidental Petroleum 44 is 1.33 times less risky than Kyndryl Holdings. It trades about 0.12 of its potential returns per unit of risk. Kyndryl Holdings is currently generating about 0.0 per unit of risk. If you would invest  7,022  in Occidental Petroleum 44 on December 26, 2024 and sell it today you would earn a total of  912.00  from holding Occidental Petroleum 44 or generate 12.99% return on investment over 90 days.

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

Occidental Petroleum 44  vs.  Kyndryl Holdings

Occidental Petroleum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Occidental Petroleum 44 are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Occidental sustained solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Occidental and Kyndryl Holdings

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

The idea behind Occidental Petroleum 44 and Kyndryl Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.