Correlation Between Infosys and REC

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

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

Diversification Opportunities for Infosys and REC

-0.47

Correlation Coefficient

Infosys  REC

Very good diversification

The 3 months correlation between Infosys and REC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and REC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC 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 REC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Limited has no effect on the direction of Infosys i.e., Infosys and REC go up and down completely randomly.

Pair Corralation between Infosys and REC

Assuming the 90 days trading horizon Infosys Limited is expected to generate 0.72 times more return on investment than REC. However, Infosys Limited is 1.38 times less risky than REC. It trades about 0.1 of its potential returns per unit of risk. REC Limited is currently generating about -0.07 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 Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Infosys Limited  vs.  REC 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 uncertain basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in August 2025.

REC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days REC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Infosys and REC

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

The idea behind Infosys Limited and REC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.