Correlation Between Accenture Plc and Infosys

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

By analyzing existing cross correlation between Accenture plc and Infosys Ltd ADR, you can compare the effects of market volatilities on Accenture Plc and Infosys 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 Accenture Plc with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Infosys.

Diversification Opportunities for Accenture Plc and Infosys

0.74

Correlation Coefficient

Accenture Plc  Infosys

Poor diversification

The 3 months correlation between Accenture and Infosys is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Accenture plc and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Accenture Plc 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 Accenture plc are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Accenture Plc i.e., Accenture Plc and Infosys go up and down completely randomly.

Pair Corralation between Accenture Plc and Infosys

Considering the 90-day investment horizon Accenture plc is expected to generate 1.16 times more return on investment than Infosys. However, Accenture Plc is 1.16 times more volatile than Infosys Ltd ADR. It trades about -0.13 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about -0.22 per unit of risk. If you would invest  35,100  in Accenture plc on December 30, 2024 and sell it today you would lose (4,667) from holding Accenture plc or give up 13.3% of portfolio value over 90 days.

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

Accenture plc  vs.  Infosys Ltd ADR

Accenture plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Infosys Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Accenture Plc and Infosys

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

The idea behind Accenture plc and Infosys Ltd ADR 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.