Correlation Between Deveron Corp and ExlService Holdings

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

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

Diversification Opportunities for Deveron Corp and ExlService Holdings

0.67

Correlation Coefficient

Deveron Corp  ExlService Holdings

Poor diversification

The 3 months correlation between Deveron and ExlService is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Deveron Corp and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Deveron Corp 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 Deveron Corp 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 Deveron Corp i.e., Deveron Corp and ExlService Holdings go up and down completely randomly.

Pair Corralation between Deveron Corp and ExlService Holdings

Assuming the 90 days horizon Deveron Corp is expected to generate 1.01 times more return on investment than ExlService Holdings. However, Deveron Corp is 1.01 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 0.07 per unit of risk. If you would invest  0.08  in Deveron Corp on December 30, 2024 and sell it today you would earn a total of  0.01  from holding Deveron Corp or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Deveron Corp  vs.  ExlService Holdings

Deveron Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deveron Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Deveron Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 Deveron Corp and ExlService Holdings

The main advantage of trading using opposite Deveron Corp and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deveron Corp 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 Deveron Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.