Correlation Between Nayax and Genpact

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

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

Diversification Opportunities for Nayax and Genpact

0.2

Correlation Coefficient

Nayax  Genpact

Modest diversification

The 3 months correlation between Nayax and Genpact is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nayax and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Nayax 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 Nayax are associated (or correlated) with Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Nayax i.e., Nayax and Genpact go up and down completely randomly.

Pair Corralation between Nayax and Genpact

Given the investment horizon of 90 days Nayax is expected to generate 2.47 times more return on investment than Genpact. However, Nayax is 2.47 times more volatile than Genpact Limited. It trades about 0.03 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.18 per unit of risk. If you would invest  2,800  in Nayax on February 3, 2024 and sell it today you would earn a total of  41.00  from holding Nayax or generate 1.46% return on investment over 90 days.

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

Nayax  vs.  Genpact Limited

Nayax

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nayax are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Nayax showed solid returns over the last few months and may actually be approaching a breakup point.

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 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.

Pair Trading with Nayax and Genpact

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

The idea behind Nayax and Genpact Limited 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.

Check out your portfolio center.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.