Correlation Between ExlService Holdings and Network 1

Can any of the company-specific risk be diversified away by investing in both ExlService Holdings and Network 1 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 Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ExlService Holdings and Network 1 Technologies, you can compare the effects of market volatilities on ExlService Holdings and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExlService Holdings and Network 1.

Diversification Opportunities for ExlService Holdings and Network 1

-0.41

Correlation Coefficient

ExlService Holdings  Network 1

Very good diversification

The 3 months correlation between ExlService and Network is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Network 1 go up and down completely randomly.

Pair Corralation between ExlService Holdings and Network 1

Given the investment horizon of 90 days ExlService Holdings is expected to under-perform the Network 1. But the stock apears to be less risky and, when comparing its historical volatility, ExlService Holdings is 2.11 times less risky than Network 1. The stock trades about -0.15 of its potential returns per unit of risk. The Network 1 Technologies is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  134.00  in Network 1 Technologies on September 25, 2024 and sell it today you would lose (3.00) from holding Network 1 Technologies or give up 2.24% of portfolio value over 90 days.

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

ExlService Holdings  vs.  Network 1 Technologies

ExlService Holdings

Risk-Adjusted Performance

16 of 100

Good

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 weak essential indicators, ExlService Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with ExlService Holdings and Network 1

The main advantage of trading using opposite ExlService Holdings and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind ExlService Holdings and Network 1 Technologies 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.