Correlation Between Gartner and Infosys

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

By analyzing existing cross correlation between Gartner and Infosys Ltd ADR, you can compare the effects of market volatilities on Gartner 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 Gartner with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gartner and Infosys.

Diversification Opportunities for Gartner and Infosys

0.73

Correlation Coefficient

Gartner  Infosys

Poor diversification

The 3 months correlation between Gartner and Infosys is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Gartner 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 Gartner 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 Ltd ADR has no effect on the direction of Gartner i.e., Gartner and Infosys go up and down completely randomly.

Pair Corralation between Gartner and Infosys

Allowing for the 90-day total investment horizon Gartner is expected to generate 1.11 times more return on investment than Infosys. However, Gartner is 1.11 times more volatile than Infosys Ltd ADR. It trades about -0.15 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about -0.22 per unit of risk. If you would invest  48,545  in Gartner on December 29, 2024 and sell it today you would lose (6,720) from holding Gartner or give up 13.84% of portfolio value over 90 days.

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

Gartner  vs.  Infosys Ltd ADR

Gartner

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gartner has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Gartner and Infosys

The main advantage of trading using opposite Gartner and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner 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 Gartner and Infosys Ltd ADR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.