Correlation Between Skillful Craftsman and Infosys

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

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

Diversification Opportunities for Skillful Craftsman and Infosys

0.1

Correlation Coefficient

Skillful Craftsman  Infosys

Average diversification

The 3 months correlation between Skillful and Infosys is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Skillful Craftsman Education 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 Skillful Craftsman 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 Skillful Craftsman Education 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 Skillful Craftsman i.e., Skillful Craftsman and Infosys go up and down completely randomly.

Pair Corralation between Skillful Craftsman and Infosys

Given the investment horizon of 90 days Skillful Craftsman is expected to generate 4.84 times less return on investment than Infosys. In addition to that, Skillful Craftsman is 2.75 times more volatile than Infosys Ltd ADR. It trades about 0.0 of its total potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.04 per unit of volatility. If you would invest  2,214  in Infosys Ltd ADR on September 27, 2024 and sell it today you would earn a total of  57.50  from holding Infosys Ltd ADR or generate 2.6% return on investment over 90 days.

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

Skillful Craftsman Education  vs.  Infosys Ltd ADR

Skillful Craftsman

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skillful Craftsman Education has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Skillful Craftsman is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Infosys Ltd ADR

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Skillful Craftsman and Infosys

The main advantage of trading using opposite Skillful Craftsman and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skillful Craftsman 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 Skillful Craftsman Education 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.