Correlation Between Infosys and Lorenzini Apparels

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

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

Diversification Opportunities for Infosys and Lorenzini Apparels

0.46

Correlation Coefficient

Infosys  Lorenzini Apparels

Very weak diversification

The 3 months correlation between Infosys and Lorenzini is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Lorenzini Apparels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lorenzini Apparels 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 Lorenzini Apparels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lorenzini Apparels has no effect on the direction of Infosys i.e., Infosys and Lorenzini Apparels go up and down completely randomly.

Pair Corralation between Infosys and Lorenzini Apparels

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.46 times more return on investment than Lorenzini Apparels. However, Infosys Limited is 2.17 times less risky than Lorenzini Apparels. It trades about 0.1 of its potential returns per unit of risk. Lorenzini Apparels Limited is currently generating about 0.04 per unit of risk. If you would invest  145,257  in Infosys Limited on April 24, 2025 and sell it today you would earn a total of  12,193  from holding Infosys Limited or generate 8.39% 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.  Lorenzini Apparels 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 7 (%) 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.

Lorenzini Apparels

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lorenzini Apparels Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Lorenzini Apparels may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Infosys and Lorenzini Apparels

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

The idea behind Infosys Limited and Lorenzini Apparels 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.