Correlation Between Infosys and Hybrid Financial

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

By analyzing existing cross correlation between Infosys Limited and Hybrid Financial Services, you can compare the effects of market volatilities on Infosys and Hybrid Financial 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 Hybrid Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Hybrid Financial.

Diversification Opportunities for Infosys and Hybrid Financial

0.07

Correlation Coefficient

Infosys  Hybrid Financial

Significant diversification

The 3 months correlation between Infosys and Hybrid is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Hybrid Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hybrid Financial Services 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 Hybrid Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hybrid Financial Services has no effect on the direction of Infosys i.e., Infosys and Hybrid Financial go up and down completely randomly.

Pair Corralation between Infosys and Hybrid Financial

Assuming the 90 days trading horizon Infosys is expected to generate 8.58 times less return on investment than Hybrid Financial. But when comparing it to its historical volatility, Infosys Limited is 3.21 times less risky than Hybrid Financial. It trades about 0.16 of its potential returns per unit of risk. Hybrid Financial Services is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  1,253  in Hybrid Financial Services on September 29, 2024 and sell it today you would earn a total of  362.00  from holding Hybrid Financial Services or generate 28.89% return on investment over 90 days.

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

Infosys Limited  vs.  Hybrid Financial Services

Infosys Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 3 (%) 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.

Hybrid Financial Services

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hybrid Financial Services are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Hybrid Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Hybrid Financial

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

The idea behind Infosys Limited and Hybrid Financial Services 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.