Can any of the company-specific risk be diversified away by investing in both Kyndryl Holdings and Chindata 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 Chindata 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 Chindata Group Holdings, you can compare the effects of market volatilities on Kyndryl Holdings and Chindata 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 Chindata Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kyndryl Holdings and Chindata Group.
Diversification Opportunities for Kyndryl Holdings and Chindata Group
The 3 months correlation between Kyndryl and Chindata is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Kyndryl Holdings and Chindata Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chindata Group Holdings 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 Chindata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chindata Group Holdings has no effect on the direction of Kyndryl Holdings i.e., Kyndryl Holdings and Chindata Group go up and down completely randomly.
Pair Corralation between Kyndryl Holdings and Chindata Group
Allowing for the 90-day total investment horizon Kyndryl Holdings is expected to under-perform the Chindata Group. In addition to that, Kyndryl Holdings is 5.07 times more volatile than Chindata Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. Chindata Group Holdings is currently generating about 0.12 per unit of volatility. If you would invest 824.00 in Chindata Group Holdings on June 25, 2023 and sell it today you would earn a total of 8.00 from holding Chindata Group Holdings or generate 0.97% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.
Compared to the overall equity markets, risk-adjusted returns on investments in Chindata Group Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chindata Group exhibited solid returns over the last few months and may actually be approaching a breakup point.
Kyndryl Holdings and Chindata Group Volatility Contrast
Predicted Return Density
Pair Trading with Kyndryl Holdings and Chindata Group
The main advantage of trading using opposite Kyndryl Holdings and Chindata Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kyndryl Holdings position performs unexpectedly, Chindata 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 Chindata Group will offset losses from the drop in Chindata Group's long position.
The idea behind Kyndryl Holdings and Chindata Group 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.
Check out your portfolio center. 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
Quickly import all of your third-party portfolios from your local drive in csv format
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk
associated with market volatility, economic swings, and company-specific events. View terms and conditions