Correlation Between 1StdibsCom and Genpact

Can any of the company-specific risk be diversified away by investing in both 1StdibsCom 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 1StdibsCom and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 1StdibsCom and Genpact Limited, you can compare the effects of market volatilities on 1StdibsCom 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 1StdibsCom with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of 1StdibsCom and Genpact.

Diversification Opportunities for 1StdibsCom and Genpact

-0.63

Correlation Coefficient

1StdibsCom  Genpact

Excellent diversification

The 3 months correlation between 1StdibsCom and Genpact is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding 1StdibsCom and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and 1StdibsCom 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 1StdibsCom 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 1StdibsCom i.e., 1StdibsCom and Genpact go up and down completely randomly.

Pair Corralation between 1StdibsCom and Genpact

Given the investment horizon of 90 days 1StdibsCom is expected to generate 1.86 times more return on investment than Genpact. However, 1StdibsCom is 1.86 times more volatile than Genpact Limited. It trades about 0.06 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.07 per unit of risk. If you would invest  379.00  in 1StdibsCom on January 26, 2024 and sell it today you would earn a total of  156.00  from holding 1StdibsCom or generate 41.16% return on investment over 90 days.

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

1StdibsCom  vs.  Genpact Limited

1StdibsCom

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in 1StdibsCom are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental drivers, 1StdibsCom may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Genpact Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest inconsistent performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with 1StdibsCom and Genpact

The main advantage of trading using opposite 1StdibsCom and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 1StdibsCom 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 1StdibsCom 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.