Correlation Between Genpact and Coda Octopus

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

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

Diversification Opportunities for Genpact and Coda Octopus

-0.45

Correlation Coefficient

Genpact  Coda Octopus

Very good diversification

The 3 months correlation between Genpact and Coda is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Coda Octopus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coda Octopus Group 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 Coda Octopus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coda Octopus Group has no effect on the direction of Genpact i.e., Genpact and Coda Octopus go up and down completely randomly.

Pair Corralation between Genpact and Coda Octopus

Taking into account the 90-day investment horizon Genpact is expected to generate 2.66 times less return on investment than Coda Octopus. But when comparing it to its historical volatility, Genpact Limited is 2.04 times less risky than Coda Octopus. It trades about 0.12 of its potential returns per unit of risk. Coda Octopus Group is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  566.00  in Coda Octopus Group on February 23, 2024 and sell it today you would earn a total of  99.00  from holding Coda Octopus Group or generate 17.49% return on investment over 90 days.

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

Genpact Limited  vs.  Coda Octopus Group

Genpact Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Genpact is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Coda Octopus Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coda Octopus Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Coda Octopus sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Coda Octopus

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

The idea behind Genpact Limited and Coda Octopus Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.