Correlation Between Infosys and Nucleus Software

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

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

Diversification Opportunities for Infosys and Nucleus Software

0.73

Correlation Coefficient

Infosys  Nucleus Software

Poor diversification

The 3 months correlation between Infosys and Nucleus is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Nucleus Software Exports in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nucleus Software Exports 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 Nucleus Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nucleus Software Exports has no effect on the direction of Infosys i.e., Infosys and Nucleus Software go up and down completely randomly.

Pair Corralation between Infosys and Nucleus Software

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.61 times more return on investment than Nucleus Software. However, Infosys Limited is 1.64 times less risky than Nucleus Software. It trades about -0.18 of its potential returns per unit of risk. Nucleus Software Exports is currently generating about -0.13 per unit of risk. If you would invest  189,845  in Infosys Limited on December 30, 2024 and sell it today you would lose (32,780) from holding Infosys Limited or give up 17.27% of portfolio value over 90 days.

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

Infosys Limited  vs.  Nucleus Software Exports

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 fragile 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.

Nucleus Software Exports

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nucleus Software Exports 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 technical and fundamental 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 Infosys and Nucleus Software

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

The idea behind Infosys Limited and Nucleus Software Exports 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.