Correlation Between Genpact and Equifax

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

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

Diversification Opportunities for Genpact and Equifax

-0.65

Correlation Coefficient

Genpact  Equifax

Excellent diversification

The 3 months correlation between Genpact and Equifax is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax 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 Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Genpact i.e., Genpact and Equifax go up and down completely randomly.

Pair Corralation between Genpact and Equifax

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.0 times more return on investment than Equifax. However, Genpact is 1.0 times more volatile than Equifax. It trades about 0.11 of its potential returns per unit of risk. Equifax is currently generating about -0.09 per unit of risk. If you would invest  3,862  in Genpact Limited on September 27, 2024 and sell it today you would earn a total of  452.00  from holding Genpact Limited or generate 11.7% return on investment over 90 days.

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

Genpact Limited  vs.  Equifax

Genpact Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equifax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Genpact and Equifax

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

The idea behind Genpact Limited and Equifax 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.