Correlation Between Nio and Kyndryl Holdings
Can any of the company-specific risk be diversified away by investing in both Nio 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 Nio and Kyndryl Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nio Class A and Kyndryl Holdings, you can compare the effects of market volatilities on Nio 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 Nio with a short position of Kyndryl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nio and Kyndryl Holdings.
Diversification Opportunities for Nio and Kyndryl Holdings
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nio and Kyndryl is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nio Class A and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and Nio 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 Nio Class A 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 Nio i.e., Nio and Kyndryl Holdings go up and down completely randomly.
Pair Corralation between Nio and Kyndryl Holdings
Considering the 90-day investment horizon Nio Class A is expected to under-perform the Kyndryl Holdings. In addition to that, Nio is 1.78 times more volatile than Kyndryl Holdings. It trades about -0.41 of its total potential returns per unit of risk. Kyndryl Holdings is currently generating about -0.26 per unit of volatility. If you would invest 2,190 in Kyndryl Holdings on January 19, 2024 and sell it today you would lose (220.00) from holding Kyndryl Holdings or give up 10.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Nio Class A vs. Kyndryl Holdings
Performance |
Timeline |
Nio Class A |
Kyndryl Holdings |
Nio and Kyndryl Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nio and Kyndryl Holdings
The main advantage of trading using opposite Nio and Kyndryl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nio 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 Nio Class A 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.Kyndryl Holdings vs. International Business Machines | Kyndryl Holdings vs. Aurora Innovation | Kyndryl Holdings vs. ARB IOT Group | Kyndryl Holdings vs. 9F Inc |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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