Correlation Between Genpact and SBC Medical

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

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

Diversification Opportunities for Genpact and SBC Medical

0.49

Correlation Coefficient

Genpact  SBC Medical

Very weak diversification

The 3 months correlation between Genpact and SBC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and SBC Medical Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBC Medical Group 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 SBC Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBC Medical Group has no effect on the direction of Genpact i.e., Genpact and SBC Medical go up and down completely randomly.

Pair Corralation between Genpact and SBC Medical

Taking into account the 90-day investment horizon Genpact is expected to generate 12.0 times less return on investment than SBC Medical. But when comparing it to its historical volatility, Genpact Limited is 8.37 times less risky than SBC Medical. It trades about 0.15 of its potential returns per unit of risk. SBC Medical Group is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  7.31  in SBC Medical Group on September 12, 2024 and sell it today you would earn a total of  19.29  from holding SBC Medical Group or generate 263.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Genpact Limited  vs.  SBC Medical Group

Genpact Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 12 (%) 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.

SBC Medical Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SBC Medical Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, SBC Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Genpact and SBC Medical

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

The idea behind Genpact Limited and SBC Medical Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.