Correlation Between Genpact and Aeries Technology

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

By analyzing existing cross correlation between Genpact Limited and Aeries Technology, you can compare the effects of market volatilities on Genpact and Aeries Technology 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 Aeries Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Aeries Technology.

Diversification Opportunities for Genpact and Aeries Technology

0.25

Correlation Coefficient

Genpact  Aeries Technology

Modest diversification

The 3 months correlation between Genpact and Aeries is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Aeries Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeries Technology 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 Aeries Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeries Technology has no effect on the direction of Genpact i.e., Genpact and Aeries Technology go up and down completely randomly.

Pair Corralation between Genpact and Aeries Technology

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Aeries Technology. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 36.37 times less risky than Aeries Technology. The stock trades about -0.12 of its potential returns per unit of risk. The Aeries Technology is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  3.50  in Aeries Technology on October 8, 2024 and sell it today you would earn a total of  2.38  from holding Aeries Technology or generate 68.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	84.21%
Values	Daily Returns

Genpact Limited  vs.  Aeries Technology

Genpact Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 9 (%) 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.

Aeries Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aeries Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Aeries Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Aeries Technology

The main advantage of trading using opposite Genpact and Aeries Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Aeries Technology 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 Aeries Technology will offset losses from the drop in Aeries Technology's long position.

The idea behind Genpact Limited and Aeries Technology 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.