Correlation Between Infosys and Sindhu Trade

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

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

Diversification Opportunities for Infosys and Sindhu Trade

0.72

Correlation Coefficient

Infosys  Sindhu Trade

Poor diversification

The 3 months correlation between Infosys and Sindhu is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Sindhu Trade Links in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sindhu Trade Links 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 Sindhu Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sindhu Trade Links has no effect on the direction of Infosys i.e., Infosys and Sindhu Trade go up and down completely randomly.

Pair Corralation between Infosys and Sindhu Trade

Assuming the 90 days trading horizon Infosys is expected to generate 4.84 times less return on investment than Sindhu Trade. But when comparing it to its historical volatility, Infosys Limited is 2.8 times less risky than Sindhu Trade. It trades about 0.14 of its potential returns per unit of risk. Sindhu Trade Links is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,863  in Sindhu Trade Links on April 22, 2025 and sell it today you would earn a total of  1,440  from holding Sindhu Trade Links or generate 77.29% 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.  Sindhu Trade Links

Infosys Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Limited are ranked lower than 10 (%) 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.

Sindhu Trade Links

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sindhu Trade Links are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Sindhu Trade unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Infosys and Sindhu Trade

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

The idea behind Infosys Limited and Sindhu Trade Links 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.