Correlation Between Huron Consulting and Genpact

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

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

Diversification Opportunities for Huron Consulting and Genpact

0.81

Correlation Coefficient

Huron Consulting  Genpact

Very poor diversification

The 3 months correlation between Huron and Genpact is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Huron Consulting Group and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Huron Consulting 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 Huron Consulting Group 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 Huron Consulting i.e., Huron Consulting and Genpact go up and down completely randomly.

Pair Corralation between Huron Consulting and Genpact

Given the investment horizon of 90 days Huron Consulting Group is expected to generate 1.01 times more return on investment than Genpact. However, Huron Consulting is 1.01 times more volatile than Genpact Limited. It trades about -0.13 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.43 per unit of risk. If you would invest  12,560  in Huron Consulting Group on September 25, 2024 and sell it today you would lose (336.00) from holding Huron Consulting Group or give up 2.68% of portfolio value over 90 days.

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

Huron Consulting Group  vs.  Genpact Limited

Huron Consulting

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huron Consulting Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Huron Consulting displayed solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Huron Consulting and Genpact

The main advantage of trading using opposite Huron Consulting and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huron Consulting 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 Huron Consulting Group 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.