Correlation Between Hindustan Media and Infosys

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

By analyzing existing cross correlation between Hindustan Media Ventures and Infosys Limited, you can compare the effects of market volatilities on Hindustan Media 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 Hindustan Media with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hindustan Media and Infosys.

Diversification Opportunities for Hindustan Media and Infosys

0.42

Correlation Coefficient

Hindustan Media  Infosys

Very weak diversification

The 3 months correlation between Hindustan and Infosys is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Hindustan Media Ventures and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Hindustan Media 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 Hindustan Media Ventures 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 Hindustan Media i.e., Hindustan Media and Infosys go up and down completely randomly.

Pair Corralation between Hindustan Media and Infosys

Assuming the 90 days trading horizon Hindustan Media Ventures is expected to generate 2.24 times more return on investment than Infosys. However, Hindustan Media is 2.24 times more volatile than Infosys Limited. It trades about -0.02 of its potential returns per unit of risk. Infosys Limited is currently generating about -0.18 per unit of risk. If you would invest  9,342  in Hindustan Media Ventures on December 25, 2024 and sell it today you would lose (774.00) from holding Hindustan Media Ventures or give up 8.29% of portfolio value over 90 days.

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

Hindustan Media Ventures  vs.  Infosys Limited

Hindustan Media Ventures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hindustan Media Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Hindustan Media is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Infosys Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Limited 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hindustan Media and Infosys

The main advantage of trading using opposite Hindustan Media and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hindustan Media 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 Hindustan Media Ventures 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.