Correlation Between VNET Group and Genpact

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

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

Diversification Opportunities for VNET Group and Genpact

0.28

Correlation Coefficient

VNET Group  Genpact

Modest diversification

The 3 months correlation between VNET and Genpact is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and VNET Group 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 VNET Group DRC 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 VNET Group i.e., VNET Group and Genpact go up and down completely randomly.

Pair Corralation between VNET Group and Genpact

Given the investment horizon of 90 days VNET Group DRC is expected to generate 3.6 times more return on investment than Genpact. However, VNET Group is 3.6 times more volatile than Genpact Limited. It trades about 0.14 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.1 per unit of risk. If you would invest  334.00  in VNET Group DRC on October 15, 2024 and sell it today you would earn a total of  174.00  from holding VNET Group DRC or generate 52.1% return on investment over 90 days.

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

VNET Group DRC  vs.  Genpact Limited

VNET Group DRC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VNET Group DRC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, VNET Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Genpact Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 8 (%) 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 February 2025.

Pair Trading with VNET Group and Genpact

The main advantage of trading using opposite VNET Group and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VNET Group 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 VNET Group DRC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.