Correlation Between Genpact and Waste Connections

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

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

Diversification Opportunities for Genpact and Waste Connections

0.91

Correlation Coefficient

Genpact  Waste Connections

Almost no diversification

The 3 months correlation between Genpact and Waste is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of Genpact i.e., Genpact and Waste Connections go up and down completely randomly.

Pair Corralation between Genpact and Waste Connections

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.85 times more return on investment than Waste Connections. However, Genpact is 1.85 times more volatile than Waste Connections. It trades about 0.16 of its potential returns per unit of risk. Waste Connections is currently generating about 0.21 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  784.00  from holding Genpact Limited or generate 18.27% return on investment over 90 days.

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

Genpact Limited  vs.  Waste Connections

Genpact Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 12 (%) 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.

Waste Connections

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Waste Connections are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental indicators, Waste Connections displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and Waste Connections

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

The idea behind Genpact Limited and Waste Connections 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..