Correlation Between Infosys and EnLink

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

Diversification Opportunities for Infosys and EnLink

-0.17

Correlation Coefficient

Infosys  EnLink

Good diversification

The 3 months correlation between Infosys and EnLink is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and EnLink Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EnLink Midstream Partners 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 EnLink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EnLink Midstream Partners has no effect on the direction of Infosys i.e., Infosys and EnLink go up and down completely randomly.

Pair Corralation between Infosys and EnLink

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 3.11 times more return on investment than EnLink. However, Infosys is 3.11 times more volatile than EnLink Midstream Partners. It trades about 0.02 of its potential returns per unit of risk. EnLink Midstream Partners is currently generating about -0.09 per unit of risk. If you would invest  2,299  in Infosys Ltd ADR on September 12, 2024 and sell it today you would earn a total of  25.00  from holding Infosys Ltd ADR or generate 1.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Infosys Ltd ADR  vs.  EnLink Midstream Partners

Infosys Ltd ADR

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

EnLink Midstream Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EnLink Midstream Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, EnLink is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Infosys and EnLink

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

The idea behind Infosys Ltd ADR and EnLink Midstream Partners 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 Transaction History module to view history of all your transactions and understand their impact on performance.