Correlation Between Genpact and Bowman Consulting

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

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

Diversification Opportunities for Genpact and Bowman Consulting

-0.62

Correlation Coefficient

Genpact  Bowman Consulting

Excellent diversification

The 3 months correlation between Genpact and Bowman is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Bowman Consulting Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bowman Consulting and Genpact 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 Genpact Limited are associated (or correlated) with Bowman Consulting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bowman Consulting has no effect on the direction of Genpact i.e., Genpact and Bowman Consulting go up and down completely randomly.

Pair Corralation between Genpact and Bowman Consulting

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.75 times more return on investment than Bowman Consulting. However, Genpact Limited is 1.34 times less risky than Bowman Consulting. It trades about 0.13 of its potential returns per unit of risk. Bowman Consulting Group is currently generating about -0.16 per unit of risk. If you would invest  4,600  in Genpact Limited on November 29, 2024 and sell it today you would earn a total of  640.00  from holding Genpact Limited or generate 13.91% return on investment over 90 days.

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

Genpact Limited  vs.  Bowman Consulting Group

Genpact Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 10 (%) 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.

Bowman Consulting

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bowman Consulting Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Genpact and Bowman Consulting

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

The idea behind Genpact Limited and Bowman Consulting Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.