Correlation Between Infosys and International Business
Can any of the company-specific risk be diversified away by investing in both Infosys and International Business 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 International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and International Business Machines, you can compare the effects of market volatilities on Infosys and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and International Business.
Diversification Opportunities for Infosys and International Business
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infosys and International is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Infosys i.e., Infosys and International Business go up and down completely randomly.
Pair Corralation between Infosys and International Business
Assuming the 90 days horizon Infosys Limited is expected to generate 10.88 times more return on investment than International Business. However, Infosys is 10.88 times more volatile than International Business Machines. It trades about 0.05 of its potential returns per unit of risk. International Business Machines is currently generating about 0.09 per unit of risk. If you would invest 334.00 in Infosys Limited on October 12, 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 Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Limited vs. International Business Machine
Performance |
| Timeline |
| Infosys Limited |
| International Business |
Infosys and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and International Business
The main advantage of trading using opposite Infosys and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Infosys vs. Sunny Optical Technology | Infosys vs. Agilent Technologies | Infosys vs. VELA TECHNOLPLC LS 0001 | Infosys vs. Rayonier Advanced Materials |
| International Business vs. Accenture plc | International Business vs. International Business Machines | International Business vs. Capgemini SE | International Business vs. FUJITSU LTD ADR |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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