Correlation Between Genpact and CACI International

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

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

Diversification Opportunities for Genpact and CACI International

-0.8

Correlation Coefficient

Genpact  CACI International

Pay attention - limited upside

The 3 months correlation between Genpact and CACI is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CACI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CACI International 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 CACI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CACI International has no effect on the direction of Genpact i.e., Genpact and CACI International go up and down completely randomly.

Pair Corralation between Genpact and CACI International

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.67 times more return on investment than CACI International. However, Genpact Limited is 1.5 times less risky than CACI International. It trades about 0.15 of its potential returns per unit of risk. CACI International is currently generating about -0.04 per unit of risk. If you would invest  4,291  in Genpact Limited on December 27, 2024 and sell it today you would earn a total of  743.00  from holding Genpact Limited or generate 17.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Genpact Limited  vs.  CACI International

Genpact Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 11 (%) 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.

CACI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, CACI International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Genpact and CACI International

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

The idea behind Genpact Limited and CACI International 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.