Correlation Between Genpact and Lucas GC

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

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

Diversification Opportunities for Genpact and Lucas GC

-0.12

Correlation Coefficient

Genpact  Lucas GC

Good diversification

The 3 months correlation between Genpact and Lucas is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Lucas GC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lucas GC Limited 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 Lucas GC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lucas GC Limited has no effect on the direction of Genpact i.e., Genpact and Lucas GC go up and down completely randomly.

Pair Corralation between Genpact and Lucas GC

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.27 times more return on investment than Lucas GC. However, Genpact Limited is 3.74 times less risky than Lucas GC. It trades about 0.15 of its potential returns per unit of risk. Lucas GC Limited is currently generating about 0.0 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	Insignificant
Accuracy	98.36%
Values	Daily Returns

Genpact Limited  vs.  Lucas GC Limited

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.

Lucas GC Limited

Risk-Adjusted Performance

Weak

Over the last 90 days Lucas GC Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Lucas GC is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Genpact and Lucas GC

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

The idea behind Genpact Limited and Lucas GC Limited 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.