Correlation Between Nomura Research and ExlService Holdings

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

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

Diversification Opportunities for Nomura Research and ExlService Holdings

-0.87

Correlation Coefficient

Nomura Research  ExlService Holdings

Pay attention - limited upside

The 3 months correlation between Nomura and ExlService is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Research Institute and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Nomura Research 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 Nomura Research Institute 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 Nomura Research i.e., Nomura Research and ExlService Holdings go up and down completely randomly.

Pair Corralation between Nomura Research and ExlService Holdings

Assuming the 90 days horizon Nomura Research Institute is expected to generate 1.84 times more return on investment than ExlService Holdings. However, Nomura Research is 1.84 times more volatile than ExlService Holdings. It trades about 0.11 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.19 per unit of risk. If you would invest  2,943  in Nomura Research Institute on September 17, 2024 and sell it today you would earn a total of  97.00  from holding Nomura Research Institute or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Nomura Research Institute  vs.  ExlService Holdings

Nomura Research Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Research Institute 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 essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ExlService Holdings

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 20 (%) 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.

Pair Trading with Nomura Research and ExlService Holdings

The main advantage of trading using opposite Nomura Research and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Research 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 Nomura Research Institute 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..