Correlation Between Excel Corp and Genpact
Can any of the company-specific risk be diversified away by investing in both Excel Corp 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 Excel Corp and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Excel Corp and Genpact Limited, you can compare the effects of market volatilities on Excel Corp 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 Excel Corp with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Excel Corp and Genpact.
Diversification Opportunities for Excel Corp and Genpact
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Excel and Genpact is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Excel Corp and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Excel Corp 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 Excel Corp 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 Excel Corp i.e., Excel Corp and Genpact go up and down completely randomly.
Pair Corralation between Excel Corp and Genpact
Given the investment horizon of 90 days Excel Corp is expected to under-perform the Genpact. In addition to that, Excel Corp is 12.06 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 -0.24 per unit of volatility. If you would invest 3,614 in Genpact Limited on January 24, 2024 and sell it today you would lose (460.00) from holding Genpact Limited or give up 12.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Excel Corp vs. Genpact Limited
Performance |
| Timeline |
| Excel Corp |
| Genpact Limited |
Excel Corp and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Excel Corp and Genpact
The main advantage of trading using opposite Excel Corp and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Excel Corp 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 Excel Corp 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.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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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