Correlation Between WNS Holdings and EPAM Systems

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

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

Diversification Opportunities for WNS Holdings and EPAM Systems

-0.24

Correlation Coefficient

WNS Holdings  EPAM Systems

Very good diversification

The 3 months correlation between WNS and EPAM is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding WNS Holdings and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems and WNS 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 WNS Holdings are associated (or correlated) with EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of WNS Holdings i.e., WNS Holdings and EPAM Systems go up and down completely randomly.

Pair Corralation between WNS Holdings and EPAM Systems

Considering the 90-day investment horizon WNS Holdings is expected to generate 1.37 times more return on investment than EPAM Systems. However, WNS Holdings is 1.37 times more volatile than EPAM Systems. It trades about 0.16 of its potential returns per unit of risk. EPAM Systems is currently generating about -0.19 per unit of risk. If you would invest  4,679  in WNS Holdings on December 27, 2024 and sell it today you would earn a total of  1,734  from holding WNS Holdings or generate 37.06% return on investment over 90 days.

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

WNS Holdings  vs.  EPAM Systems

WNS Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WNS Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, WNS Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

EPAM Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days EPAM Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with WNS Holdings and EPAM Systems

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

The idea behind WNS Holdings and EPAM Systems 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.