Correlation Between Waste Connections and Genpact

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

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

Diversification Opportunities for Waste Connections and Genpact

0.51

Correlation Coefficient

Waste Connections  Genpact

Very weak diversification

The 3 months correlation between Waste and Genpact is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Waste Connections and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Waste Connections 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 Waste Connections 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 Waste Connections i.e., Waste Connections and Genpact go up and down completely randomly.

Pair Corralation between Waste Connections and Genpact

Considering the 90-day investment horizon Waste Connections is expected to under-perform the Genpact. But the stock apears to be less risky and, when comparing its historical volatility, Waste Connections is 1.19 times less risky than Genpact. The stock trades about -0.27 of its potential returns per unit of risk. The Genpact Limited is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest  4,473  in Genpact Limited on October 13, 2024 and sell it today you would lose (139.00) from holding Genpact Limited or give up 3.11% of portfolio value over 90 days.

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

Waste Connections  vs.  Genpact Limited

Waste Connections

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Waste Connections and Genpact

The main advantage of trading using opposite Waste Connections and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Connections 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 Waste Connections 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.