Correlation Between Infosys and SUNation Energy

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

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

Diversification Opportunities for Infosys and SUNation Energy

-0.64

Correlation Coefficient

Infosys  SUNation Energy

Excellent diversification

The 3 months correlation between Infosys and SUNation is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and SUNation Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SUNation Energy 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 Ltd ADR are associated (or correlated) with SUNation Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SUNation Energy has no effect on the direction of Infosys i.e., Infosys and SUNation Energy go up and down completely randomly.

Pair Corralation between Infosys and SUNation Energy

Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.29 times more return on investment than SUNation Energy. However, Infosys Ltd ADR is 3.43 times less risky than SUNation Energy. It trades about 0.12 of its potential returns per unit of risk. SUNation Energy is currently generating about -0.11 per unit of risk. If you would invest  1,635  in Infosys Ltd ADR on April 20, 2025 and sell it today you would earn a total of  186.00  from holding Infosys Ltd ADR or generate 11.38% return on investment over 90 days.

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

Infosys Ltd ADR  vs.  SUNation Energy

Infosys Ltd ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Infosys Ltd ADR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Infosys may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SUNation Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days SUNation Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Infosys and SUNation Energy

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

The idea behind Infosys Ltd ADR and SUNation Energy 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.