Correlation Between Infosys and Alchemy Investments

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

By analyzing existing cross correlation between Infosys Ltd ADR and Alchemy Investments Acquisition, you can compare the effects of market volatilities on Infosys and Alchemy Investments 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 Alchemy Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Alchemy Investments.

Diversification Opportunities for Infosys and Alchemy Investments

-0.19

Correlation Coefficient

Infosys  Alchemy Investments

Good diversification

The 3 months correlation between Infosys and Alchemy is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Alchemy Investments Acquisitio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alchemy Investments 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 Ltd ADR are associated (or correlated) with Alchemy Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alchemy Investments has no effect on the direction of Infosys i.e., Infosys and Alchemy Investments go up and down completely randomly.

Pair Corralation between Infosys and Alchemy Investments

Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the Alchemy Investments. But the stock apears to be less risky and, when comparing its historical volatility, Infosys Ltd ADR is 6.29 times less risky than Alchemy Investments. The stock trades about -0.11 of its potential returns per unit of risk. The Alchemy Investments Acquisition is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  8.03  in Alchemy Investments Acquisition on December 2, 2024 and sell it today you would earn a total of  3.97  from holding Alchemy Investments Acquisition or generate 49.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.18%
Values	Daily Returns

Infosys Ltd ADR  vs.  Alchemy Investments Acquisitio

Infosys Ltd ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alchemy Investments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Alchemy Investments showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Alchemy Investments

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

The idea behind Infosys Ltd ADR and Alchemy Investments Acquisition 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 Stocks Directory module to find actively traded stocks across global markets.