Correlation Between POSaBIT Systems and ExlService Holdings

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

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

Diversification Opportunities for POSaBIT Systems and ExlService Holdings

-0.63

Correlation Coefficient

POSaBIT Systems  ExlService Holdings

Excellent diversification

The 3 months correlation between POSaBIT and ExlService is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding POSaBIT Systems Corp and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and POSaBIT Systems 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 POSaBIT Systems Corp 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 POSaBIT Systems i.e., POSaBIT Systems and ExlService Holdings go up and down completely randomly.

Pair Corralation between POSaBIT Systems and ExlService Holdings

Assuming the 90 days horizon POSaBIT Systems Corp is expected to generate 8.87 times more return on investment than ExlService Holdings. However, POSaBIT Systems is 8.87 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 0.23 per unit of risk. If you would invest  5.20  in POSaBIT Systems Corp on October 20, 2024 and sell it today you would earn a total of  0.71  from holding POSaBIT Systems Corp or generate 13.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

POSaBIT Systems Corp  vs.  ExlService Holdings

POSaBIT Systems Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POSaBIT Systems Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ExlService Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 14 (%) 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.

Pair Trading with POSaBIT Systems and ExlService Holdings

The main advantage of trading using opposite POSaBIT Systems and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if POSaBIT Systems 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 POSaBIT Systems Corp 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.