Correlation Between Infosys and BF Utilities

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

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

Diversification Opportunities for Infosys and BF Utilities

0.49

Correlation Coefficient

Infosys  BF Utilities

Very weak diversification

The 3 months correlation between Infosys and BFUTILITIE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and BF Utilities Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BF Utilities Limited 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 Limited are associated (or correlated) with BF Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BF Utilities Limited has no effect on the direction of Infosys i.e., Infosys and BF Utilities go up and down completely randomly.

Pair Corralation between Infosys and BF Utilities

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.69 times more return on investment than BF Utilities. However, Infosys Limited is 1.44 times less risky than BF Utilities. It trades about 0.12 of its potential returns per unit of risk. BF Utilities Limited is currently generating about 0.03 per unit of risk. If you would invest  142,891  in Infosys Limited on April 21, 2025 and sell it today you would earn a total of  15,719  from holding Infosys Limited or generate 11.0% return on investment over 90 days.

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

Infosys Limited  vs.  BF Utilities Limited

Infosys Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in August 2025.

BF Utilities Limited

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BF Utilities Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, BF Utilities is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Infosys and BF Utilities

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

The idea behind Infosys Limited and BF Utilities 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.