Correlation Between Infosys and KROGER

Can any of the company-specific risk be diversified away by investing in both Infosys and KROGER 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 KROGER 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 KROGER 75 percent, you can compare the effects of market volatilities on Infosys and KROGER 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 KROGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and KROGER.

Diversification Opportunities for Infosys and KROGER

0.4

Correlation Coefficient

Infosys  KROGER

Very weak diversification

The 3 months correlation between Infosys and KROGER is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and KROGER 75 percent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KROGER 75 percent 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 KROGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KROGER 75 percent has no effect on the direction of Infosys i.e., Infosys and KROGER go up and down completely randomly.

Pair Corralation between Infosys and KROGER

Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the KROGER. In addition to that, Infosys is 2.08 times more volatile than KROGER 75 percent. It trades about -0.11 of its total potential returns per unit of risk. KROGER 75 percent is currently generating about -0.01 per unit of volatility. If you would invest  11,463  in KROGER 75 percent on December 3, 2024 and sell it today you would lose (46.00) from holding KROGER 75 percent or give up 0.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	88.52%
Values	Daily Returns

Infosys Ltd ADR  vs.  KROGER 75 percent

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.

KROGER 75 percent

Risk-Adjusted Performance

Very Weak

Over the last 90 days KROGER 75 percent has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KROGER 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 KROGER

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

The idea behind Infosys Ltd ADR and KROGER 75 percent 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 CEOs Directory module to screen CEOs from public companies around the world.