Correlation Between Infosys and Beyond Oil

Can any of the company-specific risk be diversified away by investing in both Infosys and Beyond Oil 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 Beyond Oil 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 Beyond Oil, you can compare the effects of market volatilities on Infosys and Beyond Oil 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 Beyond Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Beyond Oil.

Diversification Opportunities for Infosys and Beyond Oil

-0.87

Correlation Coefficient

Infosys  Beyond Oil

Pay attention - limited upside

The 3 months correlation between Infosys and Beyond is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Beyond Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Oil 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 Beyond Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Oil has no effect on the direction of Infosys i.e., Infosys and Beyond Oil go up and down completely randomly.

Pair Corralation between Infosys and Beyond Oil

Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the Beyond Oil. But the stock apears to be less risky and, when comparing its historical volatility, Infosys Ltd ADR is 4.25 times less risky than Beyond Oil. The stock trades about -0.28 of its potential returns per unit of risk. The Beyond Oil is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  101.00  in Beyond Oil on December 21, 2024 and sell it today you would earn a total of  205.00  from holding Beyond Oil or generate 202.97% return on investment over 90 days.

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

Infosys Ltd ADR  vs.  Beyond Oil

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 inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Beyond Oil

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Oil are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Beyond Oil reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Beyond Oil

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

The idea behind Infosys Ltd ADR and Beyond Oil 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.