Correlation Between Infosys and SIS

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

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

Diversification Opportunities for Infosys and SIS

0.72

Correlation Coefficient

Infosys  SIS

Poor diversification

The 3 months correlation between Infosys and SIS is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and SIS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIS LIMITED 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 SIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIS LIMITED has no effect on the direction of Infosys i.e., Infosys and SIS go up and down completely randomly.

Pair Corralation between Infosys and SIS

Assuming the 90 days trading horizon Infosys Limited is expected to under-perform the SIS. But the stock apears to be less risky and, when comparing its historical volatility, Infosys Limited is 1.7 times less risky than SIS. The stock trades about -0.17 of its potential returns per unit of risk. The SIS LIMITED is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  36,960  in SIS LIMITED on December 27, 2024 and sell it today you would lose (3,915) from holding SIS LIMITED or give up 10.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Infosys Limited  vs.  SIS LIMITED

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.

SIS LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Infosys and SIS

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

The idea behind Infosys Limited and SIS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.