Correlation Between Genpact and Euro Tech

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

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

Diversification Opportunities for Genpact and Euro Tech

-0.77

Correlation Coefficient

Genpact  Euro Tech

Pay attention - limited upside

The 3 months correlation between Genpact and Euro is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Euro Tech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euro Tech Holdings 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 Euro Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euro Tech Holdings has no effect on the direction of Genpact i.e., Genpact and Euro Tech go up and down completely randomly.

Pair Corralation between Genpact and Euro Tech

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.58 times more return on investment than Euro Tech. However, Genpact Limited is 1.74 times less risky than Euro Tech. It trades about 0.15 of its potential returns per unit of risk. Euro Tech Holdings is currently generating about -0.06 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	Weak
Accuracy	100.0%
Values	Daily Returns

Genpact Limited  vs.  Euro Tech Holdings

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.

Euro Tech Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Euro Tech Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic 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 Genpact and Euro Tech

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

The idea behind Genpact Limited and Euro Tech Holdings 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.