Correlation Between Genpact and Hilton

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Can any of the company-specific risk be diversified away by investing in both Genpact and Hilton 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 Hilton into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact and Hilton Inc, you can compare the effects of market volatilities on Genpact and Hilton 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 Hilton. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and Hilton.

Diversification Opportunities for Genpact and Hilton

0.28
  Correlation Coefficient

Modest diversification

The 3 months correlation between Genpact and Hilton is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Genpact and Hilton Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilton Inc 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 are associated (or correlated) with Hilton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilton Inc has no effect on the direction of Genpact i.e., Genpact and Hilton go up and down completely randomly.

Pair Corralation between Genpact and Hilton

Taking into account the 90-day investment horizon Genpact is expected to under-perform the Hilton. But the stock apears to be less risky and, when comparing its historical volatility, Genpact is 1.41 times less risky than Hilton. The stock trades about -0.02 of its potential returns per unit of risk. The Hilton Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13,911  in Hilton Inc on August 29, 2022 and sell it today you would lose (86.00)  from holding Hilton Inc or give up 0.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Genpact  vs.  Hilton Inc

 Performance (%) 
       Timeline  
Genpact 
Genpact Performance
0 of 100
Over the last 90 days Genpact has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Genpact is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Genpact Price Channel

Hilton Inc 
Hilton Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Hilton Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish essential indicators, Hilton may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Hilton Price Channel

Genpact and Hilton Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genpact and Hilton

The main advantage of trading using opposite Genpact and Hilton positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, Hilton 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 Hilton will offset losses from the drop in Hilton's long position.
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The idea behind Genpact and Hilton Inc 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.
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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