Correlation Between Mcleod Russel and Infosys

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

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

Diversification Opportunities for Mcleod Russel and Infosys

0.68

Correlation Coefficient

Mcleod Russel  Infosys

Poor diversification

The 3 months correlation between Mcleod and Infosys is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Mcleod Russel India and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Mcleod Russel 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 Mcleod Russel India 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 Mcleod Russel i.e., Mcleod Russel and Infosys go up and down completely randomly.

Pair Corralation between Mcleod Russel and Infosys

Assuming the 90 days trading horizon Mcleod Russel India is expected to under-perform the Infosys. In addition to that, Mcleod Russel is 2.6 times more volatile than Infosys Limited. It trades about -0.09 of its total potential returns per unit of risk. Infosys Limited is currently generating about -0.15 per unit of volatility. If you would invest  190,900  in Infosys Limited on December 26, 2024 and sell it today you would lose (28,055) from holding Infosys Limited or give up 14.7% of portfolio value over 90 days.

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

Mcleod Russel India  vs.  Infosys Limited

Mcleod Russel India

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mcleod Russel India has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Infosys Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Limited 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.

Pair Trading with Mcleod Russel and Infosys

The main advantage of trading using opposite Mcleod Russel and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mcleod Russel 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 Mcleod Russel India 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.