Correlation Between CSE Global and Genpact

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

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

Diversification Opportunities for CSE Global and Genpact

0.58

Correlation Coefficient

CSE Global  Genpact

Very weak diversification

The 3 months correlation between CSE and Genpact is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and CSE Global 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 CSE Global Limited 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 CSE Global i.e., CSE Global and Genpact go up and down completely randomly.

Pair Corralation between CSE Global and Genpact

Assuming the 90 days horizon CSE Global is expected to generate 1.02 times less return on investment than Genpact. In addition to that, CSE Global is 1.72 times more volatile than Genpact Limited. It trades about 0.05 of its total potential returns per unit of risk. Genpact Limited is currently generating about 0.09 per unit of volatility. If you would invest  3,949  in Genpact Limited on October 4, 2024 and sell it today you would earn a total of  346.00  from holding Genpact Limited or generate 8.76% return on investment over 90 days.

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

CSE Global Limited  vs.  Genpact Limited

CSE Global Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, CSE Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Genpact Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CSE Global and Genpact

The main advantage of trading using opposite CSE Global and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSE Global 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 CSE Global Limited 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.