Correlation Between Soluna Holdings and ExlService Holdings

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

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

Diversification Opportunities for Soluna Holdings and ExlService Holdings

0.42

Correlation Coefficient

Soluna Holdings  ExlService Holdings

Very weak diversification

The 3 months correlation between Soluna and ExlService is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Soluna Holdings Preferred and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Soluna 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 Soluna Holdings Preferred 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 Soluna Holdings i.e., Soluna Holdings and ExlService Holdings go up and down completely randomly.

Pair Corralation between Soluna Holdings and ExlService Holdings

Assuming the 90 days horizon Soluna Holdings Preferred is expected to generate 4.77 times more return on investment than ExlService Holdings. However, Soluna Holdings is 4.77 times more volatile than ExlService Holdings. It trades about 0.07 of its potential returns per unit of risk. ExlService Holdings is currently generating about 0.04 per unit of risk. If you would invest  238.00  in Soluna Holdings Preferred on October 4, 2024 and sell it today you would earn a total of  642.00  from holding Soluna Holdings Preferred or generate 269.75% return on investment over 90 days.

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

Soluna Holdings Preferred  vs.  ExlService Holdings

Soluna Holdings Preferred

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soluna Holdings Preferred are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical indicators, Soluna Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

ExlService Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 11 (%) 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 Soluna Holdings and ExlService Holdings

The main advantage of trading using opposite Soluna Holdings and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soluna Holdings 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 Soluna Holdings Preferred 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.