Correlation Between Singapore Reinsurance and Infosys

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

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

Diversification Opportunities for Singapore Reinsurance and Infosys

0.57

Correlation Coefficient

Singapore Reinsurance  Infosys

Very weak diversification

The 3 months correlation between Singapore and Infosys is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Singapore Reinsurance and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance i.e., Singapore Reinsurance and Infosys go up and down completely randomly.

Pair Corralation between Singapore Reinsurance and Infosys

Assuming the 90 days trading horizon Singapore Reinsurance is expected to generate 1.34 times more return on investment than Infosys. However, Singapore Reinsurance is 1.34 times more volatile than Infosys Limited. It trades about 0.17 of its potential returns per unit of risk. Infosys Limited is currently generating about 0.07 per unit of risk. If you would invest  2,900  in Singapore Reinsurance on October 10, 2024 and sell it today you would earn a total of  720.00  from holding Singapore Reinsurance or generate 24.83% return on investment over 90 days.

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

Singapore Reinsurance  vs.  Infosys Limited

Singapore Reinsurance

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singapore Reinsurance are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Singapore Reinsurance unveiled solid returns over the last few months and may actually be approaching a breakup point.

Infosys Limited

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Singapore Reinsurance and Infosys

The main advantage of trading using opposite Singapore Reinsurance and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singapore Reinsurance 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 Singapore Reinsurance 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.