Correlation Between Infosys and Hindustan Media

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

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

Diversification Opportunities for Infosys and Hindustan Media

0.57

Correlation Coefficient

Infosys  Hindustan Media

Very weak diversification

The 3 months correlation between Infosys and Hindustan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Hindustan Media Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hindustan Media Ventures and Infosys 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 Infosys Limited are associated (or correlated) with Hindustan Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hindustan Media Ventures has no effect on the direction of Infosys i.e., Infosys and Hindustan Media go up and down completely randomly.

Pair Corralation between Infosys and Hindustan Media

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.85 times more return on investment than Hindustan Media. However, Infosys Limited is 1.18 times less risky than Hindustan Media. It trades about 0.03 of its potential returns per unit of risk. Hindustan Media Ventures is currently generating about -0.03 per unit of risk. If you would invest  189,740  in Infosys Limited on October 10, 2024 and sell it today you would earn a total of  3,345  from holding Infosys Limited or generate 1.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Infosys Limited  vs.  Hindustan Media Ventures

Infosys Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 2 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Hindustan Media Ventures

Risk-Adjusted Performance

0 of 100

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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Infosys and Hindustan Media

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

The idea behind Infosys Limited and Hindustan Media Ventures 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.