Correlation Between Genpact and Transportation Portfolio

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

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

Diversification Opportunities for Genpact and Transportation Portfolio

0.79

Correlation Coefficient

Genpact  Transportation Portfolio

Poor diversification

The 3 months correlation between Genpact and Transportation is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Transportation Portfolio Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transportation Portfolio 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 Transportation Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transportation Portfolio has no effect on the direction of Genpact i.e., Genpact and Transportation Portfolio go up and down completely randomly.

Pair Corralation between Genpact and Transportation Portfolio

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 1.47 times more return on investment than Transportation Portfolio. However, Genpact is 1.47 times more volatile than Transportation Portfolio Transportation. It trades about 0.18 of its potential returns per unit of risk. Transportation Portfolio Transportation is currently generating about 0.16 per unit of risk. If you would invest  3,859  in Genpact Limited on September 2, 2024 and sell it today you would earn a total of  757.00  from holding Genpact Limited or generate 19.62% return on investment over 90 days.

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

Genpact Limited  vs.  Transportation Portfolio Trans

Genpact Limited

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 13 (%) 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.

Transportation Portfolio

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Transportation Portfolio Transportation are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Transportation Portfolio may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Genpact and Transportation Portfolio

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

The idea behind Genpact Limited and Transportation Portfolio Transportation 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.

Check out your portfolio center.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.