Correlation Between Oneconnect Financial and ExlService Holdings

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

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

Diversification Opportunities for Oneconnect Financial and ExlService Holdings

0.57

Correlation Coefficient

Oneconnect Financial  ExlService Holdings

Very weak diversification

The 3 months correlation between Oneconnect and ExlService is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Oneconnect Financial Technolog and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Oneconnect Financial 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 Oneconnect Financial Technology 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 Oneconnect Financial i.e., Oneconnect Financial and ExlService Holdings go up and down completely randomly.

Pair Corralation between Oneconnect Financial and ExlService Holdings

Given the investment horizon of 90 days Oneconnect Financial Technology is expected to generate 4.5 times more return on investment than ExlService Holdings. However, Oneconnect Financial is 4.5 times more volatile than ExlService Holdings. It trades about 0.06 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.12 per unit of risk. If you would invest  316.00  in Oneconnect Financial Technology on December 3, 2024 and sell it today you would earn a total of  352.00  from holding Oneconnect Financial Technology or generate 111.39% return on investment over 90 days.

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

Oneconnect Financial Technolog  vs.  ExlService Holdings

Oneconnect Financial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oneconnect Financial Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Oneconnect Financial unveiled solid returns over the last few months and may actually be approaching a breakup point.

ExlService Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, ExlService Holdings 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 Oneconnect Financial and ExlService Holdings

The main advantage of trading using opposite Oneconnect Financial and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oneconnect Financial 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 Oneconnect Financial Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.