Correlation Between Genpact and Exponent
Can any of the company-specific risk be diversified away by investing in both Genpact and Exponent 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 Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Exponent, you can compare the effects of market volatilities on Genpact and Exponent 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 Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Exponent.
Diversification Opportunities for Genpact and Exponent
Weak diversification
The 3 months correlation between Genpact and Exponent is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Genpact i.e., Genpact and Exponent go up and down completely randomly.
Pair Corralation between Genpact and Exponent
Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Exponent. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 1.18 times less risky than Exponent. The stock trades about -0.32 of its potential returns per unit of risk. The Exponent is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 7,968 in Exponent on January 19, 2024 and sell it today you would lose (156.00) from holding Exponent or give up 1.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Genpact Limited vs. Exponent
Performance |
| Timeline |
| Genpact Limited |
| Exponent |
Genpact and Exponent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and Exponent
The main advantage of trading using opposite Genpact and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.| Genpact vs. International Business Machines | Genpact vs. Aurora Innovation | Genpact vs. ARB IOT Group | Genpact vs. 9F Inc |
| Exponent vs. CRA International | Exponent vs. Huron Consulting Group | Exponent vs. Forrester Research | Exponent vs. Resources Connection |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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