Correlation Between Genpact and Interface

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

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

Diversification Opportunities for Genpact and Interface

-0.4

Correlation Coefficient

Genpact  Interface

Very good diversification

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

Pair Corralation between Genpact and Interface

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Interface. In addition to that, Genpact is 1.31 times more volatile than Interface. It trades about -0.05 of its total potential returns per unit of risk. Interface is currently generating about 0.11 per unit of volatility. If you would invest  1,879  in Interface on April 30, 2025 and sell it today you would earn a total of  233.00  from holding Interface or generate 12.4% 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.  Interface

Genpact Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Interface

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Interface

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

The idea behind Genpact Limited and Interface 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.