Correlation Between Infosys and Reliance Home

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

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

Diversification Opportunities for Infosys and Reliance Home

0.73

Correlation Coefficient

Infosys  Reliance Home

Poor diversification

The 3 months correlation between Infosys and Reliance is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Reliance Home Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliance Home Finance 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 Reliance Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliance Home Finance has no effect on the direction of Infosys i.e., Infosys and Reliance Home go up and down completely randomly.

Pair Corralation between Infosys and Reliance Home

Assuming the 90 days trading horizon Infosys is expected to generate 4.43 times less return on investment than Reliance Home. But when comparing it to its historical volatility, Infosys Limited is 2.61 times less risky than Reliance Home. It trades about 0.1 of its potential returns per unit of risk. Reliance Home Finance is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  351.00  in Reliance Home Finance on April 23, 2025 and sell it today you would earn a total of  152.00  from holding Reliance Home Finance or generate 43.3% return on investment over 90 days.

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

Infosys Limited  vs.  Reliance Home Finance

Infosys Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Reliance Home Finance

Risk-Adjusted Performance

Good

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

Pair Trading with Infosys and Reliance Home

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

The idea behind Infosys Limited and Reliance Home Finance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.