Correlation Between Infosys and DATATEC

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

By analyzing existing cross correlation between Infosys Limited and DATATEC LTD 2, you can compare the effects of market volatilities on Infosys and DATATEC 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 DATATEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and DATATEC.

Diversification Opportunities for Infosys and DATATEC

0.66

Correlation Coefficient

Infosys  DATATEC

Poor diversification

The 3 months correlation between Infosys and DATATEC is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and DATATEC LTD 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATATEC LTD 2 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 DATATEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATATEC LTD 2 has no effect on the direction of Infosys i.e., Infosys and DATATEC go up and down completely randomly.

Pair Corralation between Infosys and DATATEC

Assuming the 90 days horizon Infosys is expected to generate 1.36 times less return on investment than DATATEC. In addition to that, Infosys is 1.04 times more volatile than DATATEC LTD 2. It trades about 0.11 of its total potential returns per unit of risk. DATATEC LTD 2 is currently generating about 0.16 per unit of volatility. If you would invest  540.00  in DATATEC LTD 2 on June 16, 2025 and sell it today you would earn a total of  30.00  from holding DATATEC LTD 2 or generate 5.56% 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.  DATATEC LTD 2

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. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

DATATEC LTD 2

Risk-Adjusted Performance

Weakest

Over the last 90 days DATATEC LTD 2 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DATATEC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Infosys and DATATEC

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

The idea behind Infosys Limited and DATATEC LTD 2 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.