Correlation Between SIS and Infosys

Can any of the company-specific risk be diversified away by investing in both SIS 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 SIS and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SIS LIMITED and Infosys Limited, you can compare the effects of market volatilities on SIS 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 SIS with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of SIS and Infosys.

Diversification Opportunities for SIS and Infosys

0.06

Correlation Coefficient

SIS  Infosys

Significant diversification

The 3 months correlation between SIS and Infosys is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding SIS LIMITED and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and SIS 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 SIS 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 SIS i.e., SIS and Infosys go up and down completely randomly.

Pair Corralation between SIS and Infosys

Assuming the 90 days trading horizon SIS LIMITED is expected to under-perform the Infosys. In addition to that, SIS is 2.0 times more volatile than Infosys Limited. It trades about -0.05 of its total potential returns per unit of risk. Infosys Limited is currently generating about -0.07 per unit of volatility. If you would invest  149,500  in Infosys Limited on February 23, 2024 and sell it today you would lose (4,020) from holding Infosys Limited or give up 2.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SIS LIMITED  vs.  Infosys Limited

SIS LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SIS LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, SIS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Infosys Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SIS and Infosys

The main advantage of trading using opposite SIS and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SIS 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.

The idea behind SIS LIMITED and Infosys Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.