Correlation Between Booking Holdings and Genpact
Can any of the company-specific risk be diversified away by investing in both Booking Holdings 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 Booking Holdings and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Genpact Limited, you can compare the effects of market volatilities on Booking Holdings 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 Booking Holdings with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Genpact.
Diversification Opportunities for Booking Holdings and Genpact
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Booking and Genpact is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Booking Holdings 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 Booking Holdings 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 Booking Holdings i.e., Booking Holdings and Genpact go up and down completely randomly.
Pair Corralation between Booking Holdings and Genpact
Given the investment horizon of 90 days Booking Holdings is expected to under-perform the Genpact. In addition to that, Booking Holdings is 1.19 times more volatile than Genpact Limited. It trades about -0.16 of its total potential returns per unit of risk. Genpact Limited is currently generating about -0.08 per unit of volatility. If you would invest 3,220 in Genpact Limited on January 23, 2024 and sell it today you would lose (61.00) from holding Genpact Limited or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Booking Holdings vs. Genpact Limited
Performance |
| Timeline |
| Booking Holdings |
| Genpact Limited |
Booking Holdings and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Booking Holdings and Genpact
The main advantage of trading using opposite Booking Holdings and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings 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.| Booking Holdings vs. Appian Corp | Booking Holdings vs. Okta Inc | Booking Holdings vs. MongoDB | Booking Holdings vs. Twilio Inc |
Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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