Correlation Between Thoughtworks Holding and Genpact

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

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

Diversification Opportunities for Thoughtworks Holding and Genpact

0.73

Correlation Coefficient

Thoughtworks Holding  Genpact

Poor diversification

The 3 months correlation between Thoughtworks and Genpact is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Thoughtworks Holding and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Thoughtworks Holding 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 Thoughtworks Holding 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 Thoughtworks Holding i.e., Thoughtworks Holding and Genpact go up and down completely randomly.

Pair Corralation between Thoughtworks Holding and Genpact

Given the investment horizon of 90 days Thoughtworks Holding is expected to generate 5.18 times less return on investment than Genpact. But when comparing it to its historical volatility, Thoughtworks Holding is 3.97 times less risky than Genpact. It trades about 0.12 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  3,820  in Genpact Limited on September 18, 2024 and sell it today you would earn a total of  647.00  from holding Genpact Limited or generate 16.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.08%
Values	Daily Returns

Thoughtworks Holding  vs.  Genpact Limited

Thoughtworks Holding

Risk-Adjusted Performance

0 of 100

OK

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

Genpact Limited

Risk-Adjusted Performance

12 of 100

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.

Pair Trading with Thoughtworks Holding and Genpact

The main advantage of trading using opposite Thoughtworks Holding and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thoughtworks Holding 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 Thoughtworks Holding 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.