Correlation Between Genpact and KBR

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

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

Diversification Opportunities for Genpact and KBR

-0.56

Correlation Coefficient

Genpact  KBR

Excellent diversification

The 3 months correlation between Genpact and KBR is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and KBR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBR Inc 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 KBR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBR Inc has no effect on the direction of Genpact i.e., Genpact and KBR go up and down completely randomly.

Pair Corralation between Genpact and KBR

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the KBR. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 1.39 times less risky than KBR. The stock trades about -0.19 of its potential returns per unit of risk. The KBR Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  5,887  in KBR Inc on October 9, 2024 and sell it today you would lose (106.00) from holding KBR Inc or give up 1.8% 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.  KBR Inc

Genpact Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 9 (%) 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.

KBR Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KBR Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with sluggish performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Genpact and KBR

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

The idea behind Genpact Limited and KBR Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.