Correlation Between Infosys and GVP Infotech

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

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

Diversification Opportunities for Infosys and GVP Infotech

0.2

Correlation Coefficient

Infosys  GVP Infotech

Modest diversification

The 3 months correlation between Infosys and GVP is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and GVP Infotech Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GVP Infotech 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 GVP Infotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GVP Infotech Limited has no effect on the direction of Infosys i.e., Infosys and GVP Infotech go up and down completely randomly.

Pair Corralation between Infosys and GVP Infotech

Assuming the 90 days trading horizon Infosys is expected to generate 1.1 times less return on investment than GVP Infotech. But when comparing it to its historical volatility, Infosys Limited is 1.91 times less risky than GVP Infotech. It trades about 0.19 of its potential returns per unit of risk. GVP Infotech Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  939.00  in GVP Infotech Limited on April 7, 2025 and sell it today you would earn a total of  180.00  from holding GVP Infotech Limited or generate 19.17% return on investment over 90 days.

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

Infosys Limited  vs.  GVP Infotech 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 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Infosys unveiled solid returns over the last few months and may actually be approaching a breakup point.

GVP Infotech Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GVP Infotech Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, GVP Infotech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and GVP Infotech

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

The idea behind Infosys Limited and GVP Infotech 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 CEOs Directory module to screen CEOs from public companies around the world.