Correlation Between Infosys and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both Infosys and Nextplat Corp 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 Nextplat Corp 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 Nextplat Corp, you can compare the effects of market volatilities on Infosys and Nextplat Corp 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 Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Nextplat Corp.
Diversification Opportunities for Infosys and Nextplat Corp
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Infosys and Nextplat is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp 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 Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of Infosys i.e., Infosys and Nextplat Corp go up and down completely randomly.
Pair Corralation between Infosys and Nextplat Corp
Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.2 times more return on investment than Nextplat Corp. However, Infosys Ltd ADR is 4.98 times less risky than Nextplat Corp. It trades about 0.2 of its potential returns per unit of risk. Nextplat Corp is currently generating about -0.1 per unit of risk. If you would invest 2,182 in Infosys Ltd ADR on August 29, 2024 and sell it today you would earn a total of 136.00 from holding Infosys Ltd ADR or generate 6.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Ltd ADR vs. Nextplat Corp
Performance |
| Timeline |
| Infosys Ltd ADR |
| Nextplat Corp |
Infosys and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and Nextplat Corp
The main advantage of trading using opposite Infosys and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, Nextplat Corp 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 Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.| Infosys vs. Data Storage Corp | Infosys vs. Usio Inc | Infosys vs. ARB IOT Group | Infosys vs. FiscalNote Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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