Correlation Between Genpact and Industrials Portfolio

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

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

Diversification Opportunities for Genpact and Industrials Portfolio

-0.08

Correlation Coefficient

Genpact  Industrials Portfolio

Good diversification

The 3 months correlation between Genpact and Industrials is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Industrials Portfolio Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrials Portfolio 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 Industrials Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrials Portfolio has no effect on the direction of Genpact i.e., Genpact and Industrials Portfolio go up and down completely randomly.

Pair Corralation between Genpact and Industrials Portfolio

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.3 times more return on investment than Industrials Portfolio. However, Genpact is 1.3 times more volatile than Industrials Portfolio Industrials. It trades about 0.15 of its potential returns per unit of risk. Industrials Portfolio Industrials is currently generating about -0.03 per unit of risk. If you would invest  4,264  in Genpact Limited on December 30, 2024 and sell it today you would earn a total of  736.00  from holding Genpact Limited or generate 17.26% return on investment over 90 days.

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

Genpact Limited  vs.  Industrials Portfolio Industri

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.

Industrials Portfolio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Industrials Portfolio Industrials has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Industrials Portfolio is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Genpact and Industrials Portfolio

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

The idea behind Genpact Limited and Industrials Portfolio Industrials 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.