Correlation Between Genpact and Verisk Analytics

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Can any of the company-specific risk be diversified away by investing in both Genpact and Verisk Analytics 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 Verisk Analytics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Verisk Analytics, you can compare the effects of market volatilities on Genpact and Verisk Analytics 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 Verisk Analytics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Verisk Analytics.

Diversification Opportunities for Genpact and Verisk Analytics

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Genpact and Verisk is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Verisk Analytics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verisk Analytics 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 Verisk Analytics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verisk Analytics has no effect on the direction of Genpact i.e., Genpact and Verisk Analytics go up and down completely randomly.

Pair Corralation between Genpact and Verisk Analytics

Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Verisk Analytics. In addition to that, Genpact is 1.4 times more volatile than Verisk Analytics. It trades about -0.07 of its total potential returns per unit of risk. Verisk Analytics is currently generating about 0.08 per unit of volatility. If you would invest  18,945  in Verisk Analytics on December 30, 2023 and sell it today you would earn a total of  4,628  from holding Verisk Analytics or generate 24.43% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Genpact Limited  vs.  Verisk Analytics

 Performance 
       Timeline  
Genpact Limited 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Genpact is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
Verisk Analytics 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Verisk Analytics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Verisk Analytics is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Genpact and Verisk Analytics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genpact and Verisk Analytics

The main advantage of trading using opposite Genpact and Verisk Analytics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Verisk Analytics 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 Verisk Analytics will offset losses from the drop in Verisk Analytics' long position.
The idea behind Genpact Limited and Verisk Analytics 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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