Correlation Between Genpact and Geo
Can any of the company-specific risk be diversified away by investing in both Genpact and Geo 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 Geo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and Geo Group, you can compare the effects of market volatilities on Genpact and Geo 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 Geo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Geo.
Diversification Opportunities for Genpact and Geo
Almost no diversification
The 3 months correlation between Genpact and Geo is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and Geo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geo 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 Geo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geo Group has no effect on the direction of Genpact i.e., Genpact and Geo go up and down completely randomly.
Pair Corralation between Genpact and Geo
Taking into account the 90-day investment horizon Genpact Limited is expected to under-perform the Geo. But the stock apears to be less risky and, when comparing its historical volatility, Genpact Limited is 3.24 times less risky than Geo. The stock trades about -0.18 of its potential returns per unit of risk. The Geo Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 2,505 in Geo Group on September 13, 2024 and sell it today you would earn a total of 275.00 from holding Geo Group or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Genpact Limited vs. Geo Group
Performance |
| Timeline |
| Genpact Limited |
| Geo Group |
Genpact and Geo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and Geo
The main advantage of trading using opposite Genpact and Geo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Geo 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 Geo will offset losses from the drop in Geo's long position.| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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