Correlation Between WT Offshore and Infosys

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

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

Diversification Opportunities for WT Offshore and Infosys

-0.3

Correlation Coefficient

WT Offshore  Infosys

Very good diversification

The 3 months correlation between WTI and Infosys is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and WT Offshore 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 WT Offshore 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 Ltd ADR has no effect on the direction of WT Offshore i.e., WT Offshore and Infosys go up and down completely randomly.

Pair Corralation between WT Offshore and Infosys

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Infosys. In addition to that, WT Offshore is 3.09 times more volatile than Infosys Ltd ADR. It trades about -0.09 of its total potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.05 per unit of volatility. If you would invest  2,271  in Infosys Ltd ADR on September 17, 2024 and sell it today you would earn a total of  82.50  from holding Infosys Ltd ADR or generate 3.63% return on investment over 90 days.

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

WT Offshore  vs.  Infosys Ltd ADR

WT Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Infosys Ltd ADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 3 (%) 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.

Pair Trading with WT Offshore and Infosys

The main advantage of trading using opposite WT Offshore and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore 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 WT Offshore and Infosys Ltd ADR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.