Correlation Between Hilton Metal and Infosys

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

Diversification Opportunities for Hilton Metal and Infosys

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Hilton and Infosys is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Metal Forging and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Hilton Metal 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 Hilton Metal Forging 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 Limited has no effect on the direction of Hilton Metal i.e., Hilton Metal and Infosys go up and down completely randomly.

Pair Corralation between Hilton Metal and Infosys

Assuming the 90 days trading horizon Hilton Metal Forging is expected to generate 2.06 times more return on investment than Infosys. However, Hilton Metal is 2.06 times more volatile than Infosys Limited. It trades about 0.1 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.02 per unit of risk. If you would invest  7,631  in Hilton Metal Forging on October 25, 2024 and sell it today you would earn a total of  1,422  from holding Hilton Metal Forging or generate 18.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Hilton Metal Forging  vs.  Infosys Limited

 Performance 
       Timeline  
Hilton Metal Forging 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Metal Forging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Hilton Metal sustained solid returns over the last few months and may actually be approaching a breakup point.
Infosys Limited 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Infosys is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Hilton Metal and Infosys Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Hilton Metal and Infosys

The main advantage of trading using opposite Hilton Metal and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Metal 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 Hilton Metal Forging and Infosys Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.

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