Correlation Between ExlService Holdings and Exponent

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

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

Diversification Opportunities for ExlService Holdings and Exponent

-0.74

Correlation Coefficient

ExlService Holdings  Exponent

Pay attention - limited upside

The 3 months correlation between ExlService and Exponent is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent 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 Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Exponent go up and down completely randomly.

Pair Corralation between ExlService Holdings and Exponent

Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.83 times more return on investment than Exponent. However, ExlService Holdings is 1.21 times less risky than Exponent. It trades about 0.04 of its potential returns per unit of risk. Exponent is currently generating about 0.0 per unit of risk. If you would invest  3,449  in ExlService Holdings on September 21, 2024 and sell it today you would earn a total of  1,053  from holding ExlService Holdings or generate 30.53% return on investment over 90 days.

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

ExlService Holdings  vs.  Exponent

ExlService Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 16 (%) 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.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with ExlService Holdings and Exponent

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

The idea behind ExlService Holdings and Exponent 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.