Correlation Between Fujitsu and Genpact

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

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

Diversification Opportunities for Fujitsu and Genpact

-0.46

Correlation Coefficient

Fujitsu  Genpact

Very good diversification

The 3 months correlation between Fujitsu and Genpact is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fujitsu Limited and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Fujitsu 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 Fujitsu 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 Fujitsu i.e., Fujitsu and Genpact go up and down completely randomly.

Pair Corralation between Fujitsu and Genpact

Assuming the 90 days horizon Fujitsu Limited is expected to under-perform the Genpact. In addition to that, Fujitsu is 7.04 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 0.3 per unit of volatility. If you would invest  4,288  in Genpact Limited on October 22, 2024 and sell it today you would earn a total of  223.00  from holding Genpact Limited or generate 5.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.74%
Values	Daily Returns

Fujitsu Limited  vs.  Genpact Limited

Fujitsu Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fujitsu Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Fujitsu is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Genpact Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fujitsu and Genpact

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

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.