Correlation Between Infosys and Intel

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

Diversification Opportunities for Infosys and Intel

0.82

Correlation Coefficient

Infosys  Intel

Very poor diversification

The 3 months correlation between Infosys and Intel is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Infosys i.e., Infosys and Intel go up and down completely randomly.

Pair Corralation between Infosys and Intel

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.46 times more return on investment than Intel. However, Infosys Ltd ADR is 2.16 times less risky than Intel. It trades about -0.18 of its potential returns per unit of risk. Intel is currently generating about -0.19 per unit of risk. If you would invest  1,996  in Infosys Ltd ADR on February 29, 2024 and sell it today you would lose (264.00) from holding Infosys Ltd ADR or give up 13.23% of portfolio value over 90 days.

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

Infosys Ltd ADR  vs.  Intel

Infosys Ltd ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infosys Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Intel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Infosys and Intel

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

The idea behind Infosys Ltd ADR and Intel 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.