Correlation Between Infosys and Align Technology
Can any of the company-specific risk be diversified away by investing in both Infosys and Align Technology 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 Align Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and Align Technology, you can compare the effects of market volatilities on Infosys and Align Technology 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 Align Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Align Technology.
Diversification Opportunities for Infosys and Align Technology
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Infosys and Align is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Align Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Align Technology 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 Align Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Align Technology has no effect on the direction of Infosys i.e., Infosys and Align Technology go up and down completely randomly.
Pair Corralation between Infosys and Align Technology
Assuming the 90 days horizon Infosys Limited is expected to generate 5.34 times more return on investment than Align Technology. However, Infosys is 5.34 times more volatile than Align Technology. It trades about 0.05 of its potential returns per unit of risk. Align Technology is currently generating about -0.01 per unit of risk. If you would invest 334.00 in Infosys Limited on October 26, 2024 and sell it today you would earn a total of 1,726 from holding Infosys Limited or generate 516.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Infosys Limited vs. Align Technology
Performance |
| Timeline |
| Infosys Limited |
| Align Technology |
Infosys and Align Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and Align Technology
The main advantage of trading using opposite Infosys and Align Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, Align Technology 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 Align Technology will offset losses from the drop in Align Technology's long position.| Infosys vs. alstria office REIT AG | Infosys vs. CHRYSALIS INVESTMENTS LTD | Infosys vs. KENEDIX OFFICE INV | Infosys vs. REINET INVESTMENTS SCA |
| Align Technology vs. Abbott Laboratories | Align Technology vs. Abbott Laboratories | Align Technology vs. Medtronic PLC | Align Technology vs. Stryker |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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