Correlation Between Appen and Genpact
Can any of the company-specific risk be diversified away by investing in both Appen 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 Appen and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Appen Limited and Genpact Limited, you can compare the effects of market volatilities on Appen 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 Appen with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Appen and Genpact.
Diversification Opportunities for Appen and Genpact
Significant diversification
The 3 months correlation between Appen and Genpact is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Appen Limited and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Appen 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 Appen Limited 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 Appen i.e., Appen and Genpact go up and down completely randomly.
Pair Corralation between Appen and Genpact
Assuming the 90 days horizon Appen Limited is expected to generate 10.88 times more return on investment than Genpact. However, Appen is 10.88 times more volatile than Genpact Limited. It trades about 0.06 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.02 per unit of risk. If you would invest 118.00 in Appen Limited on November 5, 2024 and sell it today you would lose (37.00) from holding Appen Limited or give up 31.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Appen Limited vs. Genpact Limited
Performance |
| Timeline |
| Appen Limited |
| Genpact Limited |
Appen and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Appen and Genpact
The main advantage of trading using opposite Appen and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Appen 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.| Appen vs. Atos Origin SA | Appen vs. Aurora Innovation | Appen vs. Appen Limited | Appen vs. Direct Communication Solutions |
| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService Holdings |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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