Correlation Between Aurora Innovation and ExlService Holdings

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

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

Diversification Opportunities for Aurora Innovation and ExlService Holdings

0.35

Correlation Coefficient

Aurora Innovation  ExlService Holdings

Weak diversification

The 3 months correlation between Aurora and ExlService is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Innovation and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Aurora Innovation 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 Aurora Innovation 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 Aurora Innovation i.e., Aurora Innovation and ExlService Holdings go up and down completely randomly.

Pair Corralation between Aurora Innovation and ExlService Holdings

Assuming the 90 days horizon Aurora Innovation is expected to generate 11.43 times more return on investment than ExlService Holdings. However, Aurora Innovation is 11.43 times more volatile than ExlService Holdings. It trades about 0.08 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.07 per unit of risk. If you would invest  112.00  in Aurora Innovation on December 30, 2024 and sell it today you would earn a total of  31.00  from holding Aurora Innovation or generate 27.68% return on investment over 90 days.

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

Aurora Innovation  vs.  ExlService Holdings

Aurora Innovation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Aurora Innovation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Aurora Innovation showed solid returns over the last few months and may actually be approaching a breakup point.

ExlService Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, ExlService Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Aurora Innovation and ExlService Holdings

The main advantage of trading using opposite Aurora Innovation and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Innovation 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 Aurora Innovation 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.