Correlation Between Genpact and ARB IOT
Can any of the company-specific risk be diversified away by investing in both Genpact and ARB IOT 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 ARB IOT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and ARB IOT Group, you can compare the effects of market volatilities on Genpact and ARB IOT 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 ARB IOT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and ARB IOT.
Diversification Opportunities for Genpact and ARB IOT
Poor diversification
The 3 months correlation between Genpact and ARB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and ARB IOT Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARB IOT Group 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 ARB IOT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARB IOT Group has no effect on the direction of Genpact i.e., Genpact and ARB IOT go up and down completely randomly.
Pair Corralation between Genpact and ARB IOT
Taking into account the 90-day investment horizon Genpact is expected to generate 1.26 times less return on investment than ARB IOT. But when comparing it to its historical volatility, Genpact Limited is 5.44 times less risky than ARB IOT. It trades about 0.37 of its potential returns per unit of risk. ARB IOT Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 47.00 in ARB IOT Group on August 31, 2024 and sell it today you would earn a total of 4.00 from holding ARB IOT Group or generate 8.51% 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. ARB IOT Group
Performance |
| Timeline |
| Genpact Limited |
| ARB IOT Group |
Genpact and ARB IOT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and ARB IOT
The main advantage of trading using opposite Genpact and ARB IOT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, ARB IOT 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 ARB IOT will offset losses from the drop in ARB IOT's long position.| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService Holdings |
| ARB IOT vs. RLJ Lodging Trust | ARB IOT vs. Aquagold International | ARB IOT vs. Stepstone Group | ARB IOT vs. Morningstar Unconstrained Allocation |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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