Correlation Between Genpact and ExlService Holdings

Can any of the company-specific risk be diversified away by investing in both Genpact and ExlService Holdings 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 ExlService Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genpact Limited and ExlService Holdings, you can compare the effects of market volatilities on Genpact and ExlService Holdings 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 ExlService Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and ExlService Holdings.

Diversification Opportunities for Genpact and ExlService Holdings

0.56

Correlation Coefficient

Genpact  ExlService Holdings

Very weak diversification

The 3 months correlation between Genpact and ExlService is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings 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 ExlService Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExlService Holdings has no effect on the direction of Genpact i.e., Genpact and ExlService Holdings go up and down completely randomly.

Pair Corralation between Genpact and ExlService Holdings

Taking into account the 90-day investment horizon Genpact Limited is expected to generate 0.78 times more return on investment than ExlService Holdings. However, Genpact Limited is 1.29 times less risky than ExlService Holdings. It trades about -0.19 of its potential returns per unit of risk. ExlService Holdings is currently generating about -0.17 per unit of risk. If you would invest  3,261  in Genpact Limited on January 30, 2024 and sell it today you would lose (171.00) from holding Genpact Limited or give up 5.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Genpact Limited  vs.  ExlService Holdings

Genpact Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genpact Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ExlService Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ExlService Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Genpact and ExlService Holdings

The main advantage of trading using opposite Genpact and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, ExlService Holdings 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 ExlService Holdings will offset losses from the drop in ExlService Holdings' long position.

The idea behind Genpact Limited and ExlService Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.