Correlation Between Snap and Genpact

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Can any of the company-specific risk be diversified away by investing in both Snap 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 Snap and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Snap Inc and Genpact Limited, you can compare the effects of market volatilities on Snap 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 Snap with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Snap and Genpact.

Diversification Opportunities for Snap and Genpact

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Snap and Genpact is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Snap Inc and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Snap 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 Snap Inc 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 Snap i.e., Snap and Genpact go up and down completely randomly.

Pair Corralation between Snap and Genpact

Given the investment horizon of 90 days Snap Inc is expected to generate 1.78 times more return on investment than Genpact. However, Snap is 1.78 times more volatile than Genpact Limited. It trades about 0.1 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.24 per unit of risk. If you would invest  1,090  in Snap Inc on December 29, 2023 and sell it today you would earn a total of  55.00  from holding Snap Inc or generate 5.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Snap Inc  vs.  Genpact Limited

 Performance 
       Timeline  
Snap Inc 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Snap Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.
Genpact Limited 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Genpact is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Snap and Genpact Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Snap and Genpact

The main advantage of trading using opposite Snap and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Snap 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 Snap Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.

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