Correlation Between Genpact and YY Group

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

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

Diversification Opportunities for Genpact and YY Group

0.83

Correlation Coefficient

Genpact  YY Group

Very poor diversification

The 3 months correlation between Genpact and YYGH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and YY Group Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YY Group Holding 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 YY Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YY Group Holding has no effect on the direction of Genpact i.e., Genpact and YY Group go up and down completely randomly.

Pair Corralation between Genpact and YY Group

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.53 times more return on investment than YY Group. However, Genpact Limited is 1.9 times less risky than YY Group. It trades about 0.14 of its potential returns per unit of risk. YY Group Holding is currently generating about 0.05 per unit of risk. If you would invest  3,896  in Genpact Limited on October 6, 2024 and sell it today you would earn a total of  457.00  from holding Genpact Limited or generate 11.73% return on investment over 90 days.

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

Genpact Limited  vs.  YY Group Holding

Genpact Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in February 2025.

YY Group Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in YY Group Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, YY Group demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and YY Group

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

The idea behind Genpact Limited and YY Group Holding 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.