Correlation Between VSE and Genpact

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

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

Diversification Opportunities for VSE and Genpact

0.8

Correlation Coefficient

VSE  Genpact

Very poor diversification

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

Pair Corralation between VSE and Genpact

Given the investment horizon of 90 days VSE Corporation is expected to under-perform the Genpact. In addition to that, VSE is 2.31 times more volatile than Genpact Limited. It trades about -0.2 of its total potential returns per unit of risk. Genpact Limited is currently generating about -0.18 per unit of volatility. If you would invest  4,651  in Genpact Limited on September 13, 2024 and sell it today you would lose (178.00) from holding Genpact Limited or give up 3.83% of portfolio value over 90 days.

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

VSE Corp.  vs.  Genpact Limited

VSE Corporation

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VSE Corporation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, VSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with VSE and Genpact

The main advantage of trading using opposite VSE and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VSE 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 VSE Corporation 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.