Correlation Between KAR Auction and Genpact
Can any of the company-specific risk be diversified away by investing in both KAR Auction 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 KAR Auction and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KAR Auction Services and Genpact Limited, you can compare the effects of market volatilities on KAR Auction 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 KAR Auction with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAR Auction and Genpact.
Diversification Opportunities for KAR Auction and Genpact
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between KAR and Genpact is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding KAR Auction Services and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and KAR Auction 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 KAR Auction Services 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 KAR Auction i.e., KAR Auction and Genpact go up and down completely randomly.
Pair Corralation between KAR Auction and Genpact
Considering the 90-day investment horizon KAR Auction Services is expected to generate 1.28 times more return on investment than Genpact. However, KAR Auction is 1.28 times more volatile than Genpact Limited. It trades about 0.32 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.4 per unit of risk. If you would invest 1,633 in KAR Auction Services on August 30, 2024 and sell it today you would earn a total of 378.00 from holding KAR Auction Services or generate 23.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KAR Auction Services vs. Genpact Limited
Performance |
| Timeline |
| KAR Auction Services |
| Genpact Limited |
KAR Auction and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KAR Auction and Genpact
The main advantage of trading using opposite KAR Auction and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAR Auction 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.| KAR Auction vs. CarGurus | KAR Auction vs. Kingsway Financial Services | KAR Auction vs. Driven Brands Holdings | KAR Auction vs. Group 1 Automotive |
| 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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