Correlation Between Infosys and Allient

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

By analyzing existing cross correlation between Infosys Ltd ADR and Allient, you can compare the effects of market volatilities on Infosys and Allient 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 Allient. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Allient.

Diversification Opportunities for Infosys and Allient

0.44

Correlation Coefficient

Infosys  Allient

Very weak diversification

The 3 months correlation between Infosys and Allient is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient 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 Ltd ADR are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Infosys i.e., Infosys and Allient go up and down completely randomly.

Pair Corralation between Infosys and Allient

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.53 times more return on investment than Allient. However, Infosys Ltd ADR is 1.88 times less risky than Allient. It trades about 0.03 of its potential returns per unit of risk. Allient is currently generating about -0.01 per unit of risk. If you would invest  1,853  in Infosys Ltd ADR on September 28, 2024 and sell it today you would earn a total of  395.00  from holding Infosys Ltd ADR or generate 21.32% return on investment over 90 days.

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

Infosys Ltd ADR  vs.  Allient

Infosys Ltd ADR

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Allient

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Allient

The main advantage of trading using opposite Infosys and Allient positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, Allient 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 Allient will offset losses from the drop in Allient's long position.

The idea behind Infosys Ltd ADR and Allient 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.