Correlation Between Titan Company and Infosys

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

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

Diversification Opportunities for Titan Company and Infosys

0.54

Correlation Coefficient

Titan Company  Infosys

Very weak diversification

The 3 months correlation between Titan and Infosys is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Titan Company Limited and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited and Titan Company 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 Titan Company 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 Titan Company i.e., Titan Company and Infosys go up and down completely randomly.

Pair Corralation between Titan Company and Infosys

Assuming the 90 days trading horizon Titan Company Limited is expected to under-perform the Infosys. But the stock apears to be less risky and, when comparing its historical volatility, Titan Company Limited is 1.07 times less risky than Infosys. The stock trades about -0.1 of its potential returns per unit of risk. The Infosys Limited is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  190,081  in Infosys Limited on September 4, 2024 and sell it today you would lose (2,101) from holding Infosys Limited or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Titan Company Limited  vs.  Infosys Limited

Titan Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Titan Company Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 comparatively stable basic indicators, Infosys is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Titan Company and Infosys

The main advantage of trading using opposite Titan Company and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Titan Company 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 Titan Company 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.