Correlation Between Infosys and Binani Industries

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

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

Diversification Opportunities for Infosys and Binani Industries

-0.51

Correlation Coefficient

Infosys  Binani Industries

Excellent diversification

The 3 months correlation between Infosys and Binani is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Binani Industries Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binani Industries 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 Binani Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binani Industries has no effect on the direction of Infosys i.e., Infosys and Binani Industries go up and down completely randomly.

Pair Corralation between Infosys and Binani Industries

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.29 times more return on investment than Binani Industries. However, Infosys Limited is 3.45 times less risky than Binani Industries. It trades about 0.17 of its potential returns per unit of risk. Binani Industries Limited is currently generating about 0.02 per unit of risk. If you would invest  140,898  in Infosys Limited on April 8, 2025 and sell it today you would earn a total of  23,172  from holding Infosys Limited or generate 16.45% return on investment over 90 days.

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

Infosys Limited  vs.  Binani Industries Limited

Infosys Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Infosys unveiled solid returns over the last few months and may actually be approaching a breakup point.

Binani Industries

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Binani Industries Limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Binani Industries is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Infosys and Binani Industries

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

The idea behind Infosys Limited and Binani Industries 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.