Correlation Between Civeo Corp and Genpact

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

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

Diversification Opportunities for Civeo Corp and Genpact

-0.8

Correlation Coefficient

Civeo Corp  Genpact

Pay attention - limited upside

The 3 months correlation between Civeo and Genpact is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Civeo Corp and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Civeo 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 Civeo 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 Civeo Corp i.e., Civeo Corp and Genpact go up and down completely randomly.

Pair Corralation between Civeo Corp and Genpact

Given the investment horizon of 90 days Civeo Corp is expected to under-perform the Genpact. But the stock apears to be less risky and, when comparing its historical volatility, Civeo Corp is 1.51 times less risky than Genpact. The stock trades about -0.23 of its potential returns per unit of risk. The Genpact Limited is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  3,817  in Genpact Limited on September 1, 2024 and sell it today you would earn a total of  799.00  from holding Genpact Limited or generate 20.93% return on investment over 90 days.

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

Civeo Corp  vs.  Genpact Limited

Civeo Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Civeo Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Genpact Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Civeo Corp and Genpact

The main advantage of trading using opposite Civeo Corp and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Civeo 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 Civeo 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.