Correlation Between Diodes Incorporated and Genpact

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

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

Diversification Opportunities for Diodes Incorporated and Genpact

0.04

Correlation Coefficient

Diodes Incorporated  Genpact

Significant diversification

The 3 months correlation between Diodes and Genpact is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Diodes Incorporated 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 Diodes Incorporated 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 Diodes Incorporated i.e., Diodes Incorporated and Genpact go up and down completely randomly.

Pair Corralation between Diodes Incorporated and Genpact

Given the investment horizon of 90 days Diodes Incorporated is expected to generate 1.91 times more return on investment than Genpact. However, Diodes Incorporated is 1.91 times more volatile than Genpact Limited. It trades about 0.09 of its potential returns per unit of risk. Genpact Limited is currently generating about -0.37 per unit of risk. If you would invest  6,464  in Diodes Incorporated on January 19, 2024 and sell it today you would earn a total of  252.00  from holding Diodes Incorporated or generate 3.9% return on investment over 90 days.

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

Diodes Incorporated  vs.  Genpact Limited

Diodes Incorporated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Diodes Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Diodes Incorporated is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 unfluctuating 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 Diodes Incorporated and Genpact

The main advantage of trading using opposite Diodes Incorporated and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diodes Incorporated 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 Diodes Incorporated 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.