Correlation Between Infosys and CSP
Can any of the company-specific risk be diversified away by investing in both Infosys and CSP 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 CSP 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 CSP Inc, you can compare the effects of market volatilities on Infosys and CSP 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 CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and CSP.
Diversification Opportunities for Infosys and CSP
Excellent diversification
The 3 months correlation between Infosys and CSP is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Ltd ADR and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc 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 CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Infosys i.e., Infosys and CSP go up and down completely randomly.
Pair Corralation between Infosys and CSP
Given the investment horizon of 90 days Infosys Ltd ADR is expected to under-perform the CSP. But the stock apears to be less risky and, when comparing its historical volatility, Infosys Ltd ADR is 2.39 times less risky than CSP. The stock trades about -0.08 of its potential returns per unit of risk. The CSP Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 1,546 in CSP Inc on April 13, 2025 and sell it today you would lose (351.00) from holding CSP Inc or give up 22.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Infosys Ltd ADR vs. CSP Inc
Performance |
| Timeline |
| Infosys Ltd ADR |
| CSP Inc |
Infosys and CSP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Infosys and CSP
The main advantage of trading using opposite Infosys and CSP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys position performs unexpectedly, CSP 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 CSP will offset losses from the drop in CSP's long position.| Infosys vs. Wipro Limited ADR | Infosys vs. Cognizant Technology Solutions | Infosys vs. Accenture plc | Infosys vs. Fiserv, |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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