Correlation Between Digimarc and ExlService Holdings

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

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

Diversification Opportunities for Digimarc and ExlService Holdings

0.55

Correlation Coefficient

Digimarc  ExlService Holdings

Very weak diversification

The 3 months correlation between Digimarc and ExlService is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and ExlService Holdings go up and down completely randomly.

Pair Corralation between Digimarc and ExlService Holdings

Given the investment horizon of 90 days Digimarc is expected to under-perform the ExlService Holdings. In addition to that, Digimarc is 2.83 times more volatile than ExlService Holdings. It trades about -0.04 of its total potential returns per unit of risk. ExlService Holdings is currently generating about 0.08 per unit of volatility. If you would invest  3,408  in ExlService Holdings on April 5, 2025 and sell it today you would earn a total of  1,057  from holding ExlService Holdings or generate 31.02% return on investment over 90 days.

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

Digimarc  vs.  ExlService Holdings

Digimarc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Digimarc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Digimarc exhibited 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 unfluctuating essential indicators, ExlService Holdings may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Digimarc and ExlService Holdings

The main advantage of trading using opposite Digimarc and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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 Digimarc 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.