Correlation Between Infosys and Metropolis Healthcare

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

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

Diversification Opportunities for Infosys and Metropolis Healthcare

0.37

Correlation Coefficient

Infosys  Metropolis Healthcare

Weak diversification

The 3 months correlation between Infosys and Metropolis is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Metropolis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolis Healthcare 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 Metropolis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolis Healthcare has no effect on the direction of Infosys i.e., Infosys and Metropolis Healthcare go up and down completely randomly.

Pair Corralation between Infosys and Metropolis Healthcare

Assuming the 90 days trading horizon Infosys is expected to generate 1.31 times less return on investment than Metropolis Healthcare. But when comparing it to its historical volatility, Infosys Limited is 1.26 times less risky than Metropolis Healthcare. It trades about 0.05 of its potential returns per unit of risk. Metropolis Healthcare Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  131,922  in Metropolis Healthcare Limited on September 27, 2024 and sell it today you would earn a total of  69,438  from holding Metropolis Healthcare Limited or generate 52.64% return on investment over 90 days.

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

Infosys Limited  vs.  Metropolis Healthcare Limited

Infosys Limited

Risk-Adjusted Performance

1 of 100

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

Metropolis Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metropolis Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Infosys and Metropolis Healthcare

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

The idea behind Infosys Limited and Metropolis Healthcare 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.