Correlation Between Compucom Software and Infosys

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

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

Diversification Opportunities for Compucom Software and Infosys

0.73

Correlation Coefficient

Compucom Software  Infosys

Poor diversification

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

Pair Corralation between Compucom Software and Infosys

Assuming the 90 days trading horizon Compucom Software Limited is expected to under-perform the Infosys. In addition to that, Compucom Software is 2.19 times more volatile than Infosys Limited. It trades about -0.05 of its total potential returns per unit of risk. Infosys Limited is currently generating about -0.06 per unit of volatility. If you would invest  156,006  in Infosys Limited on May 25, 2025 and sell it today you would lose (7,256) from holding Infosys Limited or give up 4.65% of portfolio value over 90 days.

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

Compucom Software Limited  vs.  Infosys Limited

Compucom Software

Risk-Adjusted Performance

Weakest

Over the last 90 days Compucom Software Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Infosys Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Infosys is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Compucom Software and Infosys

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

The idea behind Compucom Software Limited and Infosys 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.