Correlation Between Concentrix and Wipro Limited

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

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

Diversification Opportunities for Concentrix and Wipro Limited

0.19

Correlation Coefficient

Concentrix  Wipro Limited

Average diversification

The 3 months correlation between Concentrix and Wipro is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Concentrix and Wipro Limited ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wipro Limited ADR and Concentrix 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 Concentrix are associated (or correlated) with Wipro Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wipro Limited ADR has no effect on the direction of Concentrix i.e., Concentrix and Wipro Limited go up and down completely randomly.

Pair Corralation between Concentrix and Wipro Limited

Given the investment horizon of 90 days Concentrix is expected to generate 3.4 times more return on investment than Wipro Limited. However, Concentrix is 3.4 times more volatile than Wipro Limited ADR. It trades about 0.1 of its potential returns per unit of risk. Wipro Limited ADR is currently generating about -0.12 per unit of risk. If you would invest  4,267  in Concentrix on December 30, 2024 and sell it today you would earn a total of  1,428  from holding Concentrix or generate 33.47% return on investment over 90 days.

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

Concentrix  vs.  Wipro Limited ADR

Concentrix

Risk-Adjusted Performance

OK

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

Wipro Limited ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wipro Limited ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Concentrix and Wipro Limited

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

The idea behind Concentrix and Wipro Limited ADR 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.