Correlation Between Genpact and Infosys
Can any of the company-specific risk be diversified away by investing in both Genpact and Infosys 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 Genpact and Infosys into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Infosys Ltd ADR, you can compare the effects of market volatilities on Genpact and Infosys 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 Genpact with a short position of Infosys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Infosys.
Diversification Opportunities for Genpact and Infosys
Modest diversification
The 3 months correlation between Genpact and Infosys is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Infosys Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Ltd ADR and Genpact 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 Genpact Limited are associated (or correlated) with Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Ltd ADR has no effect on the direction of Genpact i.e., Genpact and Infosys go up and down completely randomly.
Pair Corralation between Genpact and Infosys
Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.71 times more return on investment than Infosys. However, Genpact Limited is 1.42 times less risky than Infosys. It trades about 0.51 of its potential returns per unit of risk. Infosys Ltd ADR is currently generating about -0.09 per unit of risk. If you would invest 4,353 in Genpact Limited on November 4, 2024 and sell it today you would earn a total of 516.00 from holding Genpact Limited or generate 11.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. Infosys Ltd ADR
Performance |
| Timeline |
| Genpact Limited |
| Infosys Ltd ADR |
Genpact and Infosys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and Infosys
The main advantage of trading using opposite Genpact and Infosys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Infosys 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 Infosys will offset losses from the drop in Infosys' long position.| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService Holdings |
| Infosys vs. Cognizant Technology Solutions | Infosys vs. WNS Holdings | Infosys vs. CLARIVATE PLC | Infosys vs. Gartner |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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