Correlation Between Infosys and NeogamesSA

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

Diversification Opportunities for Infosys and NeogamesSA

-0.44
  Correlation Coefficient

Very good diversification

The 3 months correlation between Infosys and NeogamesSA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and NeogamesSA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NeogamesSA 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 NeogamesSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NeogamesSA has no effect on the direction of Infosys i.e., Infosys and NeogamesSA go up and down completely randomly.

Pair Corralation between Infosys and NeogamesSA

Given the investment horizon of 90 days Infosys is expected to generate 74.14 times less return on investment than NeogamesSA. But when comparing it to its historical volatility, Infosys Ltd ADR is 3.83 times less risky than NeogamesSA. It trades about 0.0 of its potential returns per unit of risk. NeogamesSA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,262  in NeogamesSA on December 29, 2023 and sell it today you would earn a total of  1,638  from holding NeogamesSA or generate 129.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Infosys Ltd ADR  vs.  NeogamesSA

 Performance 
       Timeline  
Infosys Ltd ADR 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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 fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
NeogamesSA 

Risk-Adjusted Performance

3 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in NeogamesSA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, NeogamesSA is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Infosys and NeogamesSA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Infosys and NeogamesSA

The main advantage of trading using opposite Infosys and NeogamesSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, NeogamesSA 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 NeogamesSA will offset losses from the drop in NeogamesSA's long position.
The idea behind Infosys Ltd ADR and NeogamesSA 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.
Check out your portfolio center.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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