Correlation Between Spentex Industries and Infosys

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

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

Diversification Opportunities for Spentex Industries and Infosys

0.0

Correlation Coefficient

Spentex Industries  Infosys

Pay attention - limited upside

The 3 months correlation between Spentex and Infosys is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Spentex Industries Limited and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Spentex Industries 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 Spentex Industries 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 Spentex Industries i.e., Spentex Industries and Infosys go up and down completely randomly.

Pair Corralation between Spentex Industries and Infosys

If you would invest  192,849  in Infosys Limited on September 12, 2024 and sell it today you would earn a total of  2,006  from holding Infosys Limited or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Spentex Industries Limited  vs.  Infosys Limited

Spentex Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spentex Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spentex Industries is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Infosys Limited

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Infosys is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Spentex Industries and Infosys

The main advantage of trading using opposite Spentex Industries and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spentex Industries 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 Spentex Industries 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 CEOs Directory module to screen CEOs from public companies around the world.