Correlation Between VNET Group and Kyndryl Holdings

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

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

Diversification Opportunities for VNET Group and Kyndryl Holdings

0.46

Correlation Coefficient

VNET Group  Kyndryl Holdings

Very weak diversification

The 3 months correlation between VNET and Kyndryl is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and VNET Group 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 VNET Group DRC 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 VNET Group i.e., VNET Group and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between VNET Group and Kyndryl Holdings

Given the investment horizon of 90 days VNET Group is expected to generate 1.25 times less return on investment than Kyndryl Holdings. In addition to that, VNET Group is 1.89 times more volatile than Kyndryl Holdings. It trades about 0.04 of its total potential returns per unit of risk. Kyndryl Holdings is currently generating about 0.1 per unit of volatility. If you would invest  1,588  in Kyndryl Holdings on September 12, 2024 and sell it today you would earn a total of  1,924  from holding Kyndryl Holdings or generate 121.16% return on investment over 90 days.

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

VNET Group DRC  vs.  Kyndryl Holdings

VNET Group DRC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, VNET Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with VNET Group and Kyndryl Holdings

The main advantage of trading using opposite VNET Group and Kyndryl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VNET Group 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 VNET Group DRC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.