Correlation Between Alithya and Kyndryl Holdings

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Can any of the company-specific risk be diversified away by investing in both Alithya 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 Alithya and Kyndryl Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alithya Group and Kyndryl Holdings, you can compare the effects of market volatilities on Alithya 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 Alithya with a short position of Kyndryl Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alithya and Kyndryl Holdings.

Diversification Opportunities for Alithya and Kyndryl Holdings

0.2
  Correlation Coefficient

Modest diversification

The 3 months correlation between Alithya and Kyndryl is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Alithya Group and Kyndryl Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kyndryl Holdings and Alithya 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 Alithya Group 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 Alithya i.e., Alithya and Kyndryl Holdings go up and down completely randomly.

Pair Corralation between Alithya and Kyndryl Holdings

Given the investment horizon of 90 days Alithya is expected to generate 2.12 times less return on investment than Kyndryl Holdings. But when comparing it to its historical volatility, Alithya Group is 1.15 times less risky than Kyndryl Holdings. It trades about 0.05 of its potential returns per unit of risk. Kyndryl Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,060  in Kyndryl Holdings on August 28, 2024 and sell it today you would earn a total of  2,330  from holding Kyndryl Holdings or generate 219.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy31.72%
ValuesDaily Returns

Alithya Group  vs.  Kyndryl Holdings

 Performance 
       Timeline  
Alithya Group 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Alithya Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Alithya is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Kyndryl Holdings 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Kyndryl Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Kyndryl Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Alithya and Kyndryl Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Alithya and Kyndryl Holdings

The main advantage of trading using opposite Alithya and Kyndryl Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alithya 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 Alithya Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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