Correlation Between Infosys and Freightos Limited

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

Diversification Opportunities for Infosys and Freightos Limited

-0.16

Correlation Coefficient

Infosys  Freightos Limited

Good diversification

The 3 months correlation between Infosys and Freightos is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Freightos Limited Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freightos 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 Ltd ADR are associated (or correlated) with Freightos Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freightos Limited has no effect on the direction of Infosys i.e., Infosys and Freightos Limited go up and down completely randomly.

Pair Corralation between Infosys and Freightos Limited

Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the Freightos Limited. But the stock apears to be less risky and, when comparing its historical volatility, Infosys Ltd ADR is 6.58 times less risky than Freightos Limited. The stock trades about -0.28 of its potential returns per unit of risk. The Freightos Limited Warrants is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Freightos Limited Warrants on December 21, 2024 and sell it today you would earn a total of  9.99  from holding Freightos Limited Warrants or generate 66.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.61%
Values	Daily Returns

Infosys Ltd ADR  vs.  Freightos Limited Warrants

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.

Freightos Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Freightos Limited Warrants are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Freightos Limited showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Freightos Limited

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

The idea behind Infosys Ltd ADR and Freightos Limited Warrants 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.