Correlation Between Genpact and Jack Henry

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

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

Diversification Opportunities for Genpact and Jack Henry

-0.4

Correlation Coefficient

Genpact  Jack Henry

Very good diversification

The 3 months correlation between Genpact and Jack is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Jack Henry Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jack Henry Associates 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 Jack Henry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jack Henry Associates has no effect on the direction of Genpact i.e., Genpact and Jack Henry go up and down completely randomly.

Pair Corralation between Genpact and Jack Henry

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.73 times more return on investment than Jack Henry. However, Genpact is 1.73 times more volatile than Jack Henry Associates. It trades about 0.17 of its potential returns per unit of risk. Jack Henry Associates is currently generating about 0.02 per unit of risk. If you would invest  3,908  in Genpact Limited on August 30, 2024 and sell it today you would earn a total of  741.00  from holding Genpact Limited or generate 18.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Genpact Limited  vs.  Jack Henry Associates

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.

Jack Henry Associates

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Jack Henry Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong technical indicators, Jack Henry is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genpact and Jack Henry

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

The idea behind Genpact Limited and Jack Henry Associates 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.