Correlation Between Genpact and Steelcase

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

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

Diversification Opportunities for Genpact and Steelcase

0.52

Correlation Coefficient

Genpact  Steelcase

Very weak diversification

The 3 months correlation between Genpact and Steelcase is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Steelcase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steelcase 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 Steelcase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steelcase has no effect on the direction of Genpact i.e., Genpact and Steelcase go up and down completely randomly.

Pair Corralation between Genpact and Steelcase

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.07 times more return on investment than Steelcase. However, Genpact is 1.07 times more volatile than Steelcase. It trades about 0.14 of its potential returns per unit of risk. Steelcase is currently generating about -0.1 per unit of risk. If you would invest  4,314  in Genpact Limited on December 26, 2024 and sell it today you would earn a total of  679.00  from holding Genpact Limited or generate 15.74% return on investment over 90 days.

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

Genpact Limited  vs.  Steelcase

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.

Steelcase

Risk-Adjusted Performance

Very Weak

Over the last 90 days Steelcase has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Genpact and Steelcase

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

The idea behind Genpact Limited and Steelcase 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.