Correlation Between Data Storage and Infosys

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

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

Diversification Opportunities for Data Storage and Infosys

-0.5

Correlation Coefficient

Data Storage  Infosys

Very good diversification

The 3 months correlation between Data and Infosys is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Data Storage and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Data Storage 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 Data Storage 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 Ltd ADR has no effect on the direction of Data Storage i.e., Data Storage and Infosys go up and down completely randomly.

Pair Corralation between Data Storage and Infosys

Assuming the 90 days horizon Data Storage is expected to generate 25.5 times more return on investment than Infosys. However, Data Storage is 25.5 times more volatile than Infosys Ltd ADR. It trades about 0.09 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about 0.02 per unit of risk. If you would invest  30.00  in Data Storage on April 28, 2025 and sell it today you would earn a total of  2.00  from holding Data Storage or generate 6.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Data Storage  vs.  Infosys Ltd ADR

Data Storage

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Data Storage are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Data Storage showed solid returns over the last few months and may actually be approaching a breakup point.

Infosys Ltd ADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical and fundamental indicators, Infosys is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Data Storage and Infosys

The main advantage of trading using opposite Data Storage and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Data Storage 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 Data Storage and Infosys Ltd ADR 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.