Correlation Between Hudson Technologies and Genpact

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

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

Diversification Opportunities for Hudson Technologies and Genpact

0.17

Correlation Coefficient

Hudson Technologies  Genpact

Average diversification

The 3 months correlation between Hudson and Genpact is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Hudson Technologies 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 Hudson Technologies are associated (or correlated) with Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Hudson Technologies i.e., Hudson Technologies and Genpact go up and down completely randomly.

Pair Corralation between Hudson Technologies and Genpact

Given the investment horizon of 90 days Hudson Technologies is expected to generate 82.97 times less return on investment than Genpact. In addition to that, Hudson Technologies is 1.03 times more volatile than Genpact Limited. It trades about 0.0 of its total potential returns per unit of risk. Genpact Limited is currently generating about 0.13 per unit of volatility. If you would invest  4,600  in Genpact Limited on November 28, 2024 and sell it today you would earn a total of  640.00  from holding Genpact Limited or generate 13.91% return on investment over 90 days.

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

Hudson Technologies  vs.  Genpact Limited

Hudson Technologies

Risk-Adjusted Performance

Very Weak

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

Genpact Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 10 (%) 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.

Pair Trading with Hudson Technologies and Genpact

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

The idea behind Hudson Technologies and Genpact 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.