Correlation Between Genpact and Ennis

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

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

Diversification Opportunities for Genpact and Ennis

0.38

Correlation Coefficient

Genpact  Ennis

Weak diversification

The 3 months correlation between Genpact and Ennis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Ennis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennis Inc 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 Ennis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennis Inc has no effect on the direction of Genpact i.e., Genpact and Ennis go up and down completely randomly.

Pair Corralation between Genpact and Ennis

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.03 times more return on investment than Ennis. However, Genpact is 1.03 times more volatile than Ennis Inc. It trades about 0.14 of its potential returns per unit of risk. Ennis Inc is currently generating about 0.04 per unit of risk. If you would invest  3,887  in Genpact Limited on September 16, 2024 and sell it today you would earn a total of  580.00  from holding Genpact Limited or generate 14.92% return on investment over 90 days.

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

Genpact Limited  vs.  Ennis Inc

Genpact Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 10 (%) 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.

Ennis Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ennis Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental drivers, Ennis is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Genpact and Ennis

The main advantage of trading using opposite Genpact and Ennis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Ennis 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 Ennis will offset losses from the drop in Ennis' long position.

The idea behind Genpact Limited and Ennis Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..