Correlation Between Infosys and Genesis Growth

Can any of the company-specific risk be diversified away by investing in both Infosys and Genesis Growth 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 Genesis Growth 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 Genesis Growth Tech, you can compare the effects of market volatilities on Infosys and Genesis Growth 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 Genesis Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Genesis Growth.

Diversification Opportunities for Infosys and Genesis Growth

-0.66

Correlation Coefficient

Infosys  Genesis Growth

Excellent diversification

The 3 months correlation between Infosys and Genesis is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Genesis Growth Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Growth Tech 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 Genesis Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Growth Tech has no effect on the direction of Infosys i.e., Infosys and Genesis Growth go up and down completely randomly.

Pair Corralation between Infosys and Genesis Growth

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.94 times more return on investment than Genesis Growth. However, Infosys Ltd ADR is 1.06 times less risky than Genesis Growth. It trades about 0.05 of its potential returns per unit of risk. Genesis Growth Tech is currently generating about 0.03 per unit of risk. If you would invest  1,699  in Infosys Ltd ADR on September 29, 2024 and sell it today you would earn a total of  549.00  from holding Infosys Ltd ADR or generate 32.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	55.04%
Values	Daily Returns

Infosys Ltd ADR  vs.  Genesis Growth Tech

Infosys Ltd ADR

Risk-Adjusted Performance

2 of 100

Weak

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.

Genesis Growth Tech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Growth Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genesis Growth is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infosys and Genesis Growth

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

The idea behind Infosys Ltd ADR and Genesis Growth Tech 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.