Earlier I connected one of those Joral encoders to a motor via a gearbox and recorded some test data – unfortunately the encoder is sometimes sending what seems to be nonsensical values (numbers much bigger than the expected maximum, number of turns changing at the wrong time...). 

Encoder mounting:

Since(in this case) the encoder rotates 62 times for a single revolution, the encoder must keep track of the number of turns as well as the angle. The encoder looks like it can remember up to 65536 turns. After that it forgets and starts over at zero. Realistically it means I can track the arm angle perfectly for 528 arm rotations from an arbitrary home position (32768 encoder turns / 62 = 528.51... which is not a nice round number) . If someone tries to move any further in that direction it will no longer be able to sense the angle accurately - It would be impossible to distinguish between true “home” vs 528.51 arm rotations as the data sent by the encoder would be the same for both positions.

Any ideas on what I could try to do here?

Much appreciate any help!