Correlation Between Genpact and MGT Capital
Can any of the company-specific risk be diversified away by investing in both Genpact and MGT Capital 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 Genpact and MGT Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and MGT Capital Investments, you can compare the effects of market volatilities on Genpact and MGT Capital 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 Genpact with a short position of MGT Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and MGT Capital.
Diversification Opportunities for Genpact and MGT Capital
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Genpact and MGT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and MGT Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGT Capital Investments and Genpact 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 Genpact Limited are associated (or correlated) with MGT Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGT Capital Investments has no effect on the direction of Genpact i.e., Genpact and MGT Capital go up and down completely randomly.
Pair Corralation between Genpact and MGT Capital
Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the MGT Capital. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 16.81 times less risky than MGT Capital. The stock trades about -0.07 of its potential returns per unit of risk. The MGT Capital Investments is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.60 in MGT Capital Investments on January 26, 2024 and sell it today you would lose (0.55) from holding MGT Capital Investments or give up 91.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 54.44% |
| Values | Daily Returns |
Genpact Limited vs. MGT Capital Investments
Performance |
| Timeline |
| Genpact Limited |
| MGT Capital Investments |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Genpact and MGT Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and MGT Capital
The main advantage of trading using opposite Genpact and MGT Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, MGT Capital 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 MGT Capital will offset losses from the drop in MGT Capital's long position.| Genpact vs. CACI International | Genpact vs. CDW Corp | Genpact vs. Jack Henry Associates | Genpact vs. Broadridge Financial Solutions |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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