Correlation Between Infosys and BII Railway
Can any of the company-specific risk be diversified away by investing in both Infosys and BII Railway 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 BII Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and BII Railway Transportation, you can compare the effects of market volatilities on Infosys and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and BII Railway.
Diversification Opportunities for Infosys and BII Railway
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Infosys and BII is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Infosys i.e., Infosys and BII Railway go up and down completely randomly.
Pair Corralation between Infosys and BII Railway
Assuming the 90 days horizon Infosys Limited is expected to generate 4.07 times more return on investment than BII Railway. However, Infosys is 4.07 times more volatile than BII Railway Transportation. It trades about 0.05 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.01 per unit of risk. If you would invest 334.00 in Infosys Limited on September 26, 2024 and sell it today you would earn a total of 1,856 from holding Infosys Limited or generate 555.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Limited vs. BII Railway Transportation
Performance |
| Timeline |
| Infosys Limited |
| BII Railway Transpor |
Infosys and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and BII Railway
The main advantage of trading using opposite Infosys and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway's long position.| Infosys vs. Accenture plc | Infosys vs. International Business Machines | Infosys vs. Cognizant Technology Solutions | Infosys vs. AMADEUS IT GRP |
| BII Railway vs. Accenture plc | BII Railway vs. International Business Machines | BII Railway vs. Infosys Limited | BII Railway vs. Cognizant Technology Solutions |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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