Correlation Between Infosys and Genpact

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Can any of the company-specific risk be diversified away by investing in both Infosys 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 Infosys and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Infosys Limited and Genpact, you can compare the effects of market volatilities on Infosys 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 Infosys with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Infosys and Genpact.

Diversification Opportunities for Infosys and Genpact

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Infosys and Genpact is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Infosys Limited and Genpact in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact 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 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 has no effect on the direction of Infosys i.e., Infosys and Genpact go up and down completely randomly.

Pair Corralation between Infosys and Genpact

Given the investment horizon of 90 days Infosys Limited is expected to generate 1.17 times more return on investment than Genpact. However, Infosys is 1.17 times more volatile than Genpact. It trades about 0.03 of its potential returns per unit of risk. Genpact is currently generating about 0.02 per unit of risk. If you would invest  1,364  in Infosys Limited on June 27, 2022 and sell it today you would earn a total of  297.00  from holding Infosys Limited or generate 21.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.8%
ValuesDaily Returns

Infosys Limited  vs.  Genpact

 Performance (%) 
       Timeline  
Infosys Limited 
Infosys Performance
0 of 100
Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Infosys Price Channel

Genpact 
Genpact Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Genpact are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Genpact is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Genpact Price Channel

Infosys and Genpact Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Infosys and Genpact

The main advantage of trading using opposite Infosys and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Infosys 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.
Infosys vs. Industrias Bachoco SA
The idea behind Infosys Limited and Genpact 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.
Genpact vs. Industrias Bachoco SA
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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