Correlation Between Science Applications and Genpact
Can any of the company-specific risk be diversified away by investing in both Science Applications 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 Science Applications and Genpact into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Science Applications International and Genpact Limited, you can compare the effects of market volatilities on Science Applications 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 Science Applications with a short position of Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Science Applications and Genpact.
Diversification Opportunities for Science Applications and Genpact
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Science and Genpact is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited and Science Applications 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 Science Applications International 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 Science Applications i.e., Science Applications and Genpact go up and down completely randomly.
Pair Corralation between Science Applications and Genpact
Given the investment horizon of 90 days Science Applications International is expected to under-perform the Genpact. But the stock apears to be less risky and, when comparing its historical volatility, Science Applications International is 1.09 times less risky than Genpact. The stock trades about -0.27 of its potential returns per unit of risk. The Genpact Limited is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,511 in Genpact Limited on November 18, 2024 and sell it today you would earn a total of 994.00 from holding Genpact Limited or generate 22.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Science Applications Internati vs. Genpact Limited
Performance |
| Timeline |
| Science Applications |
| Genpact Limited |
Science Applications and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Science Applications and Genpact
The main advantage of trading using opposite Science Applications and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Science Applications 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.| Science Applications vs. CACI International | Science Applications vs. CDW Corp | Science Applications vs. Gartner | Science Applications vs. Jack Henry Associates |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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