Correlation Between Lichen China and Genpact
Can any of the company-specific risk be diversified away by investing in both Lichen China 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 Lichen China and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lichen China Limited and Genpact Limited, you can compare the effects of market volatilities on Lichen China 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 Lichen China with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lichen China and Genpact.
Diversification Opportunities for Lichen China and Genpact
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Lichen and Genpact is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Lichen China Limited and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Lichen China 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 Lichen China 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 Lichen China i.e., Lichen China and Genpact go up and down completely randomly.
Pair Corralation between Lichen China and Genpact
Given the investment horizon of 90 days Lichen China is expected to generate 20.02 times less return on investment than Genpact. In addition to that, Lichen China is 2.71 times more volatile than Genpact Limited. It trades about 0.01 of its total potential returns per unit of risk. Genpact Limited is currently generating about 0.4 per unit of volatility. If you would invest 3,819 in Genpact Limited on August 30, 2024 and sell it today you would earn a total of 863.00 from holding Genpact Limited or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Lichen China Limited vs. Genpact Limited
Performance |
| Timeline |
| Lichen China Limited |
| Genpact Limited |
Lichen China and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lichen China and Genpact
The main advantage of trading using opposite Lichen China and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lichen China 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.| Lichen China vs. First Advantage Corp | Lichen China vs. Discount Print USA | Lichen China vs. Cass Information Systems | Lichen China vs. Civeo Corp |
| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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