Correlation Between CSE Global and ExlService Holdings

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

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

Diversification Opportunities for CSE Global and ExlService Holdings

0.6

Correlation Coefficient

CSE Global  ExlService Holdings

Poor diversification

The 3 months correlation between CSE and ExlService is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and CSE Global 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 CSE Global 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 CSE Global i.e., CSE Global and ExlService Holdings go up and down completely randomly.

Pair Corralation between CSE Global and ExlService Holdings

Assuming the 90 days horizon CSE Global is expected to generate 1.56 times less return on investment than ExlService Holdings. In addition to that, CSE Global is 1.96 times more volatile than ExlService Holdings. It trades about 0.05 of its total potential returns per unit of risk. ExlService Holdings is currently generating about 0.15 per unit of volatility. If you would invest  3,877  in ExlService Holdings on October 4, 2024 and sell it today you would earn a total of  561.00  from holding ExlService Holdings or generate 14.47% return on investment over 90 days.

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

CSE Global Limited  vs.  ExlService Holdings

CSE Global Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, CSE Global may actually be approaching a critical reversion point that can send shares even higher in February 2025.

ExlService Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, ExlService Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSE Global and ExlService Holdings

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

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.