Correlation Between Coforge and Voltas

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

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

Diversification Opportunities for Coforge and Voltas

0.62

Correlation Coefficient

Coforge  Voltas

Poor diversification

The 3 months correlation between Coforge and Voltas is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Coforge Limited and Voltas Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Voltas Limited and Coforge 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 Coforge Limited are associated (or correlated) with Voltas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Voltas Limited has no effect on the direction of Coforge i.e., Coforge and Voltas go up and down completely randomly.

Pair Corralation between Coforge and Voltas

Assuming the 90 days trading horizon Coforge Limited is expected to generate 1.1 times more return on investment than Voltas. However, Coforge is 1.1 times more volatile than Voltas Limited. It trades about 0.29 of its potential returns per unit of risk. Voltas Limited is currently generating about 0.04 per unit of risk. If you would invest  138,158  in Coforge Limited on April 22, 2025 and sell it today you would earn a total of  49,272  from holding Coforge Limited or generate 35.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Coforge Limited  vs.  Voltas Limited

Coforge Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coforge Limited are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Coforge exhibited solid returns over the last few months and may actually be approaching a breakup point.

Voltas Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Voltas Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Voltas is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Coforge and Voltas

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

The idea behind Coforge Limited and Voltas 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.