Correlation Between Genpact and Exponent

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

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

Diversification Opportunities for Genpact and Exponent

-0.44

Correlation Coefficient

Genpact  Exponent

Very good diversification

The 3 months correlation between Genpact and Exponent is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Genpact i.e., Genpact and Exponent go up and down completely randomly.

Pair Corralation between Genpact and Exponent

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.82 times more return on investment than Exponent. However, Genpact Limited is 1.21 times less risky than Exponent. It trades about 0.0 of its potential returns per unit of risk. Exponent is currently generating about 0.0 per unit of risk. If you would invest  4,677  in Genpact Limited on October 13, 2024 and sell it today you would lose (343.00) from holding Genpact Limited or give up 7.33% of portfolio value over 90 days.

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

Genpact Limited  vs.  Exponent

Genpact Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 8 (%) 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 February 2025.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Genpact and Exponent

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

The idea behind Genpact Limited and Exponent 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.