Correlation Between Genpact and CLARIVATE PLC

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

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

Diversification Opportunities for Genpact and CLARIVATE PLC

0.76

Correlation Coefficient

Genpact  CLARIVATE PLC

Poor diversification

The 3 months correlation between Genpact and CLARIVATE is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and CLARIVATE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLARIVATE PLC 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 CLARIVATE PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLARIVATE PLC has no effect on the direction of Genpact i.e., Genpact and CLARIVATE PLC go up and down completely randomly.

Pair Corralation between Genpact and CLARIVATE PLC

Taking into account the 90-day investment horizon Genpact is expected to generate 3.15 times less return on investment than CLARIVATE PLC. But when comparing it to its historical volatility, Genpact Limited is 2.03 times less risky than CLARIVATE PLC. It trades about 0.02 of its potential returns per unit of risk. CLARIVATE PLC is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  649.00  in CLARIVATE PLC on February 7, 2024 and sell it today you would earn a total of  56.00  from holding CLARIVATE PLC or generate 8.63% 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.  CLARIVATE PLC

Genpact Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CLARIVATE PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CLARIVATE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Genpact and CLARIVATE PLC

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

The idea behind Genpact Limited and CLARIVATE PLC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.