Correlation Between Infosys and Infosys

Can any of the company-specific risk be diversified away by investing in both Infosys and Infosys 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 Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Infosys Limited and Infosys Limited, you can compare the effects of market volatilities on Infosys and Infosys 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 Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Infosys.

Diversification Opportunities for Infosys and Infosys

0.58

Correlation Coefficient

Infosys  Infosys

Very weak diversification

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

Pair Corralation between Infosys and Infosys

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.79 times more return on investment than Infosys. However, Infosys Limited is 1.27 times less risky than Infosys. It trades about 0.05 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.01 per unit of risk. If you would invest  1,995  in Infosys Limited on October 22, 2024 and sell it today you would earn a total of  185.00  from holding Infosys Limited or generate 9.27% return on investment over 90 days.

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

Infosys Limited  vs.  Infosys Limited

Infosys Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Infosys Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Infosys is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infosys and Infosys

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

The idea behind Infosys Limited and Infosys Limited 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.