Correlation Between Castellum and ExlService Holdings

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

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

Diversification Opportunities for Castellum and ExlService Holdings

0.24

Correlation Coefficient

Castellum  ExlService Holdings

Modest diversification

The 3 months correlation between Castellum and ExlService is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Castellum and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Castellum 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 Castellum 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 Castellum i.e., Castellum and ExlService Holdings go up and down completely randomly.

Pair Corralation between Castellum and ExlService Holdings

Considering the 90-day investment horizon Castellum is expected to generate 4.58 times more return on investment than ExlService Holdings. However, Castellum is 4.58 times more volatile than ExlService Holdings. It trades about 0.12 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.28 per unit of risk. If you would invest  16.00  in Castellum on September 5, 2024 and sell it today you would earn a total of  7.00  from holding Castellum or generate 43.75% return on investment over 90 days.

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

Castellum  vs.  ExlService Holdings

Castellum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Castellum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Castellum displayed solid returns over the last few months and may actually be approaching a breakup point.

ExlService Holdings

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating essential indicators, ExlService Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Castellum and ExlService Holdings

The main advantage of trading using opposite Castellum and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castellum 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 Castellum 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 Transaction History module to view history of all your transactions and understand their impact on performance.