Correlation Between Genpact and CoreCivic

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

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

Diversification Opportunities for Genpact and CoreCivic

0.95

Correlation Coefficient

Genpact  CoreCivic

Almost no diversification

The 3 months correlation between Genpact and CoreCivic is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CoreCivic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CoreCivic 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 CoreCivic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CoreCivic has no effect on the direction of Genpact i.e., Genpact and CoreCivic go up and down completely randomly.

Pair Corralation between Genpact and CoreCivic

Taking into account the 90-day investment horizon Genpact is expected to generate 6.16 times less return on investment than CoreCivic. But when comparing it to its historical volatility, Genpact Limited is 3.11 times less risky than CoreCivic. It trades about 0.08 of its potential returns per unit of risk. CoreCivic is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,294  in CoreCivic on September 22, 2024 and sell it today you would earn a total of  791.00  from holding CoreCivic or generate 61.13% return on investment over 90 days.

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

Genpact Limited  vs.  CoreCivic

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 January 2025.

CoreCivic

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CoreCivic are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, CoreCivic showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and CoreCivic

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

The idea behind Genpact Limited and CoreCivic 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 CEOs Directory module to screen CEOs from public companies around the world.