Correlation Between Formula Systems and Genpact
Can any of the company-specific risk be diversified away by investing in both Formula Systems and Genpact 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 Formula Systems and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formula Systems 1985 and Genpact Limited, you can compare the effects of market volatilities on Formula Systems and Genpact 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 Formula Systems with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formula Systems and Genpact.
Diversification Opportunities for Formula Systems and Genpact
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Formula and Genpact is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Formula Systems 1985 and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Formula Systems 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 Formula Systems 1985 are associated (or correlated) with Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Formula Systems i.e., Formula Systems and Genpact go up and down completely randomly.
Pair Corralation between Formula Systems and Genpact
Assuming the 90 days horizon Formula Systems 1985 is expected to under-perform the Genpact. In addition to that, Formula Systems is 1.05 times more volatile than Genpact Limited. It trades about -0.05 of its total potential returns per unit of risk. Genpact Limited is currently generating about 0.35 per unit of volatility. If you would invest 3,841 in Genpact Limited on August 25, 2024 and sell it today you would earn a total of 778.00 from holding Genpact Limited or generate 20.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formula Systems 1985 vs. Genpact Limited
Performance |
| Timeline |
| Formula Systems 1985 |
| Genpact Limited |
Formula Systems and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formula Systems and Genpact
The main advantage of trading using opposite Formula Systems and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formula Systems position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact's long position.| Formula Systems vs. Data Storage Corp | Formula Systems vs. Usio Inc | Formula Systems vs. ARB IOT Group | Formula Systems vs. FiscalNote Holdings |
| Genpact vs. Oneconnect Financial Technology | Genpact vs. Global Business Travel | Genpact vs. Alight Inc | Genpact vs. CS Disco LLC |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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