Correlation Between Cass Information and Genpact

Can any of the company-specific risk be diversified away by investing in both Cass Information 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 Cass Information and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cass Information Systems and Genpact Limited, you can compare the effects of market volatilities on Cass Information 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 Cass Information with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cass Information and Genpact.

Diversification Opportunities for Cass Information and Genpact

0.8

Correlation Coefficient

Cass Information  Genpact

Very poor diversification

The 3 months correlation between Cass and Genpact is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Cass Information Systems and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Cass Information 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 Cass Information Systems 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 Cass Information i.e., Cass Information and Genpact go up and down completely randomly.

Pair Corralation between Cass Information and Genpact

Given the investment horizon of 90 days Cass Information is expected to generate 3.35 times less return on investment than Genpact. But when comparing it to its historical volatility, Cass Information Systems is 1.32 times less risky than Genpact. It trades about 0.14 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  3,834  in Genpact Limited on September 2, 2024 and sell it today you would earn a total of  782.00  from holding Genpact Limited or generate 20.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Cass Information Systems  vs.  Genpact Limited

Cass Information Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cass Information Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Cass Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Genpact Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cass Information and Genpact

The main advantage of trading using opposite Cass Information and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cass Information 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.

The idea behind Cass Information Systems and Genpact Limited 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.

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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.