Correlation Between Genpact and Soluna Holdings

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

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

Diversification Opportunities for Genpact and Soluna Holdings

0.36

Correlation Coefficient

Genpact  Soluna Holdings

Weak diversification

The 3 months correlation between Genpact and Soluna is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Soluna Holdings Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soluna Holdings Preferred 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 Soluna Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soluna Holdings Preferred has no effect on the direction of Genpact i.e., Genpact and Soluna Holdings go up and down completely randomly.

Pair Corralation between Genpact and Soluna Holdings

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.2 times more return on investment than Soluna Holdings. However, Genpact Limited is 5.09 times less risky than Soluna Holdings. It trades about -0.27 of its potential returns per unit of risk. Soluna Holdings Preferred is currently generating about -0.23 per unit of risk. If you would invest  4,550  in Genpact Limited on October 4, 2024 and sell it today you would lose (255.00) from holding Genpact Limited or give up 5.6% of portfolio value over 90 days.

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

Genpact Limited  vs.  Soluna Holdings Preferred

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.

Soluna Holdings Preferred

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Soluna Holdings

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

The idea behind Genpact Limited and Soluna Holdings Preferred 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.