Correlation Between Infosys and Oriental Rise

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

Diversification Opportunities for Infosys and Oriental Rise

-0.12

Correlation Coefficient

Infosys  Oriental Rise

Good diversification

The 3 months correlation between Infosys and Oriental is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Oriental Rise Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Rise Holdings 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 Oriental Rise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Rise Holdings has no effect on the direction of Infosys i.e., Infosys and Oriental Rise go up and down completely randomly.

Pair Corralation between Infosys and Oriental Rise

Given the investment horizon of 90 days Infosys is expected to generate 359.63 times less return on investment than Oriental Rise. But when comparing it to its historical volatility, Infosys Ltd ADR is 74.04 times less risky than Oriental Rise. It trades about 0.03 of its potential returns per unit of risk. Oriental Rise Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Oriental Rise Holdings on September 13, 2024 and sell it today you would lose (390.00) from holding Oriental Rise Holdings or give up 65.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Infosys Ltd ADR  vs.  Oriental Rise Holdings

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.

Oriental Rise Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Rise Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward indicators, Oriental Rise unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Oriental Rise

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

The idea behind Infosys Ltd ADR and Oriental Rise Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.