Correlation Between ExlService Holdings and StarTek

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

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

Diversification Opportunities for ExlService Holdings and StarTek

-0.57

Correlation Coefficient

ExlService Holdings  StarTek

Excellent diversification

The 3 months correlation between ExlService and StarTek is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and StarTek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StarTek 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 StarTek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StarTek has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and StarTek go up and down completely randomly.

Pair Corralation between ExlService Holdings and StarTek

If you would invest  3,612  in ExlService Holdings on September 17, 2024 and sell it today you would earn a total of  981.00  from holding ExlService Holdings or generate 27.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

ExlService Holdings  vs.  StarTek

ExlService Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, ExlService Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

StarTek

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days StarTek has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, StarTek is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ExlService Holdings and StarTek

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

The idea behind ExlService Holdings and StarTek 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.