Correlation Between ExlService Holdings and Aeries Technology

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

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

Diversification Opportunities for ExlService Holdings and Aeries Technology

-0.83

Correlation Coefficient

ExlService Holdings  Aeries Technology

Pay attention - limited upside

The 3 months correlation between ExlService and Aeries is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Aeries Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeries Technology and ExlService Holdings 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 ExlService Holdings are associated (or correlated) with Aeries Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeries Technology has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Aeries Technology go up and down completely randomly.

Pair Corralation between ExlService Holdings and Aeries Technology

Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.13 times more return on investment than Aeries Technology. However, ExlService Holdings is 7.51 times less risky than Aeries Technology. It trades about 0.2 of its potential returns per unit of risk. Aeries Technology is currently generating about -0.06 per unit of risk. If you would invest  3,928  in ExlService Holdings on October 23, 2024 and sell it today you would earn a total of  787.00  from holding ExlService Holdings or generate 20.04% return on investment over 90 days.

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

ExlService Holdings  vs.  Aeries Technology

ExlService Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 15 (%) 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.

Aeries Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeries Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ExlService Holdings and Aeries Technology

The main advantage of trading using opposite ExlService Holdings and Aeries Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings position performs unexpectedly, Aeries Technology 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 Aeries Technology will offset losses from the drop in Aeries Technology's long position.

The idea behind ExlService Holdings and Aeries Technology 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.