Correlation Between Genpact and Sterling Construction

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

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

Diversification Opportunities for Genpact and Sterling Construction

-0.44

Correlation Coefficient

Genpact  Sterling Construction

Very good diversification

The 3 months correlation between Genpact and Sterling is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Sterling Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sterling Construction 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 Sterling Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sterling Construction has no effect on the direction of Genpact i.e., Genpact and Sterling Construction go up and down completely randomly.

Pair Corralation between Genpact and Sterling Construction

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.4 times more return on investment than Sterling Construction. However, Genpact Limited is 2.49 times less risky than Sterling Construction. It trades about 0.06 of its potential returns per unit of risk. Sterling Construction is currently generating about -0.02 per unit of risk. If you would invest  4,431  in Genpact Limited on January 12, 2025 and sell it today you would earn a total of  299.00  from holding Genpact Limited or generate 6.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Genpact Limited  vs.  Sterling Construction

Genpact Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Genpact Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Genpact may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Sterling Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sterling Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Genpact and Sterling Construction

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

The idea behind Genpact Limited and Sterling Construction 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.