Correlation Between Genpact and Trident Digital

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

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

Diversification Opportunities for Genpact and Trident Digital

-0.6

Correlation Coefficient

Genpact  Trident Digital

Excellent diversification

The 3 months correlation between Genpact and Trident is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Trident Digital Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trident Digital Tech 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 Trident Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trident Digital Tech has no effect on the direction of Genpact i.e., Genpact and Trident Digital go up and down completely randomly.

Pair Corralation between Genpact and Trident Digital

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.12 times more return on investment than Trident Digital. However, Genpact Limited is 8.43 times less risky than Trident Digital. It trades about 0.15 of its potential returns per unit of risk. Trident Digital Tech is currently generating about -0.06 per unit of risk. If you would invest  4,264  in Genpact Limited on December 28, 2024 and sell it today you would earn a total of  736.00  from holding Genpact Limited or generate 17.26% return on investment over 90 days.

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

Genpact Limited  vs.  Trident Digital Tech

Genpact Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 11 (%) 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.

Trident Digital Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trident Digital Tech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Genpact and Trident Digital

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

The idea behind Genpact Limited and Trident Digital Tech 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.