Correlation Between Automatic Data and ExlService Holdings

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

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

Diversification Opportunities for Automatic Data and ExlService Holdings

0.45

Correlation Coefficient

Automatic Data  ExlService Holdings

Very weak diversification

The 3 months correlation between Automatic and ExlService is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Automatic Data Processing and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Automatic Data 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 Automatic Data Processing 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 Automatic Data i.e., Automatic Data and ExlService Holdings go up and down completely randomly.

Pair Corralation between Automatic Data and ExlService Holdings

Considering the 90-day investment horizon Automatic Data Processing is expected to generate 0.56 times more return on investment than ExlService Holdings. However, Automatic Data Processing is 1.77 times less risky than ExlService Holdings. It trades about 0.05 of its potential returns per unit of risk. ExlService Holdings is currently generating about -0.12 per unit of risk. If you would invest  29,911  in Automatic Data Processing on April 30, 2025 and sell it today you would earn a total of  778.00  from holding Automatic Data Processing or generate 2.6% return on investment over 90 days.

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

Automatic Data Processing  vs.  ExlService Holdings

Automatic Data Processing

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Automatic Data Processing are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Automatic Data is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

ExlService Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days ExlService Holdings 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 comparatively stable which may send shares a bit higher in August 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Automatic Data and ExlService Holdings

The main advantage of trading using opposite Automatic Data and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automatic Data 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 Automatic Data Processing 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.