Correlation Between Infosys and Sandstorm Gold

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

Diversification Opportunities for Infosys and Sandstorm Gold

-0.58

Correlation Coefficient

Infosys  Sandstorm Gold

Excellent diversification

The 3 months correlation between Infosys and Sandstorm is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Sandstorm Gold Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandstorm Gold 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 Sandstorm Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandstorm Gold has no effect on the direction of Infosys i.e., Infosys and Sandstorm Gold go up and down completely randomly.

Pair Corralation between Infosys and Sandstorm Gold

Given the investment horizon of 90 days Infosys is expected to generate 1.08 times less return on investment than Sandstorm Gold. But when comparing it to its historical volatility, Infosys Ltd ADR is 1.46 times less risky than Sandstorm Gold. It trades about 0.04 of its potential returns per unit of risk. Sandstorm Gold Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  553.00  in Sandstorm Gold Ltd on December 5, 2024 and sell it today you would earn a total of  63.00  from holding Sandstorm Gold Ltd or generate 11.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.56%
Values	Daily Returns

Infosys Ltd ADR  vs.  Sandstorm Gold Ltd

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.

Sandstorm Gold

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sandstorm Gold Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal basic indicators, Sandstorm Gold may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Infosys and Sandstorm Gold

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

The idea behind Infosys Ltd ADR and Sandstorm Gold Ltd 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.