Correlation Between Genpact and POSaBIT Systems

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

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

Diversification Opportunities for Genpact and POSaBIT Systems

-0.5

Correlation Coefficient

Genpact  POSaBIT Systems

Very good diversification

The 3 months correlation between Genpact and POSaBIT is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and POSaBIT Systems Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSaBIT Systems Corp 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 POSaBIT Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSaBIT Systems Corp has no effect on the direction of Genpact i.e., Genpact and POSaBIT Systems go up and down completely randomly.

Pair Corralation between Genpact and POSaBIT Systems

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the POSaBIT Systems. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 9.99 times less risky than POSaBIT Systems. The stock trades about -0.27 of its potential returns per unit of risk. The POSaBIT Systems Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  6.82  in POSaBIT Systems Corp on October 4, 2024 and sell it today you would lose (0.22) from holding POSaBIT Systems Corp or give up 3.23% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Genpact Limited  vs.  POSaBIT Systems Corp

Genpact Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in February 2025.

POSaBIT Systems Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSaBIT Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Genpact and POSaBIT Systems

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

The idea behind Genpact Limited and POSaBIT Systems Corp 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.