Correlation Between ExlService Holdings and Data Storage

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

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

Diversification Opportunities for ExlService Holdings and Data Storage

-0.43

Correlation Coefficient

ExlService Holdings  Data Storage

Very good diversification

The 3 months correlation between ExlService and Data is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Data Storage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage Corp and ExlService 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 ExlService Holdings are associated (or correlated) with Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage Corp has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Data Storage go up and down completely randomly.

Pair Corralation between ExlService Holdings and Data Storage

Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.6 times more return on investment than Data Storage. However, ExlService Holdings is 1.67 times less risky than Data Storage. It trades about 0.34 of its potential returns per unit of risk. Data Storage Corp is currently generating about 0.19 per unit of risk. If you would invest  3,991  in ExlService Holdings on August 13, 2024 and sell it today you would earn a total of  582.00  from holding ExlService Holdings or generate 14.58% return on investment over 90 days.

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

ExlService Holdings  vs.  Data Storage Corp

ExlService Holdings

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 24 (%) 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.

Data Storage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Data Storage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ExlService Holdings and Data Storage

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

The idea behind ExlService Holdings and Data Storage Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.