Correlation Between Genpact and Veralto

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

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

Diversification Opportunities for Genpact and Veralto

-0.42

Correlation Coefficient

Genpact  Veralto

Very good diversification

The 3 months correlation between Genpact and Veralto is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Veralto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veralto 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 Veralto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veralto has no effect on the direction of Genpact i.e., Genpact and Veralto go up and down completely randomly.

Pair Corralation between Genpact and Veralto

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Veralto. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 1.32 times less risky than Veralto. The stock trades about -0.45 of its potential returns per unit of risk. The Veralto is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  10,641  in Veralto on September 23, 2024 and sell it today you would lose (216.00) from holding Veralto or give up 2.03% 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.  Veralto

Genpact Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 6 (%) 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 January 2025.

Veralto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veralto has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Veralto is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Genpact and Veralto

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

The idea behind Genpact Limited and Veralto 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.