Correlation Between Wipro and Infosys
Can any of the company-specific risk be diversified away by investing in both Wipro 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 Wipro and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wipro Limited and Infosys Limited, you can compare the effects of market volatilities on Wipro 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 Wipro with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wipro and Infosys.
Diversification Opportunities for Wipro and Infosys
Very good diversification
The 3 months correlation between Wipro and Infosys is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wipro Limited and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Wipro 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 Wipro Limited 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 Wipro i.e., Wipro and Infosys go up and down completely randomly.
Pair Corralation between Wipro and Infosys
Assuming the 90 days trading horizon Wipro is expected to generate 1.07 times less return on investment than Infosys. In addition to that, Wipro is 1.08 times more volatile than Infosys Limited. It trades about 0.08 of its total potential returns per unit of risk. Infosys Limited is currently generating about 0.09 per unit of volatility. If you would invest 119,462 in Infosys Limited on August 29, 2024 and sell it today you would earn a total of 72,953 from holding Infosys Limited or generate 61.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Wipro Limited vs. Infosys Limited
Performance |
| Timeline |
| Wipro Limited |
| Infosys Limited |
Wipro and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wipro and Infosys
The main advantage of trading using opposite Wipro and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wipro 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.| Wipro vs. Aster DM Healthcare | Wipro vs. Rajnandini Metal Limited | Wipro vs. LLOYDS METALS AND | Wipro vs. Fortis Healthcare Limited |
| Infosys vs. Sarthak Metals Limited | Infosys vs. Alkali Metals Limited | Infosys vs. Rajnandini Metal Limited | Infosys vs. Hisar Metal Industries |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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