Correlation Between Wilhelmina and Genpact

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

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

Diversification Opportunities for Wilhelmina and Genpact

-0.16

Correlation Coefficient

Wilhelmina  Genpact

Good diversification

The 3 months correlation between Wilhelmina and Genpact is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Wilhelmina and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Wilhelmina 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 Wilhelmina 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 Wilhelmina i.e., Wilhelmina and Genpact go up and down completely randomly.

Pair Corralation between Wilhelmina and Genpact

Given the investment horizon of 90 days Wilhelmina is expected to generate 2.77 times more return on investment than Genpact. However, Wilhelmina is 2.77 times more volatile than Genpact Limited. It trades about 0.35 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.12 per unit of risk. If you would invest  321.00  in Wilhelmina on September 18, 2024 and sell it today you would earn a total of  77.00  from holding Wilhelmina or generate 23.99% return on investment over 90 days.

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

Wilhelmina  vs.  Genpact Limited

Wilhelmina

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wilhelmina has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Genpact Limited

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 9 (%) 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 Wilhelmina and Genpact

The main advantage of trading using opposite Wilhelmina and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wilhelmina 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 Wilhelmina 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.