Correlation Between StarTek and Genpact

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

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

Diversification Opportunities for StarTek and Genpact

-0.4

Correlation Coefficient

StarTek  Genpact

Very good diversification

The 3 months correlation between StarTek and Genpact is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding StarTek and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and StarTek 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 StarTek 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 StarTek i.e., StarTek and Genpact go up and down completely randomly.

Pair Corralation between StarTek and Genpact

If you would invest  4,454  in Genpact Limited on September 17, 2024 and sell it today you would earn a total of  13.00  from holding Genpact Limited or generate 0.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	5.0%
Values	Daily Returns

StarTek  vs.  Genpact Limited

StarTek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StarTek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, StarTek is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Genpact Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 11 (%) 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 StarTek and Genpact

The main advantage of trading using opposite StarTek and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if StarTek 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 StarTek 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.