Correlation Between Infosys and Applied Digital
Can any of the company-specific risk be diversified away by investing in both Infosys and Applied Digital 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 Applied Digital 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 Applied Digital, you can compare the effects of market volatilities on Infosys and Applied Digital 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 Applied Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Applied Digital.
Diversification Opportunities for Infosys and Applied Digital
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Infosys and Applied is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and Applied Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Applied Digital 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 Applied Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Applied Digital has no effect on the direction of Infosys i.e., Infosys and Applied Digital go up and down completely randomly.
Pair Corralation between Infosys and Applied Digital
Given the investment horizon of 90 days Infosys Ltd ADR is expected to generate 0.3 times more return on investment than Applied Digital. However, Infosys Ltd ADR is 3.33 times less risky than Applied Digital. It trades about 0.14 of its potential returns per unit of risk. Applied Digital is currently generating about -0.22 per unit of risk. If you would invest 1,829 in Infosys Ltd ADR on April 8, 2025 and sell it today you would earn a total of 67.00 from holding Infosys Ltd ADR or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Infosys Ltd ADR vs. Applied Digital
Performance |
| Timeline |
| Infosys Ltd ADR |
| Applied Digital |
Infosys and Applied Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and Applied Digital
The main advantage of trading using opposite Infosys and Applied Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, Applied Digital 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 Applied Digital will offset losses from the drop in Applied Digital's long position.| Infosys vs. Brunswick | Infosys vs. Playtika Holding Corp | Infosys vs. Thor Industries | Infosys vs. Emerson Radio |
| Applied Digital vs. Datadog | Applied Digital vs. Warner Music Group | Applied Digital vs. NetSol Technologies | Applied Digital vs. Tencent Music Entertainment |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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