Correlation Between ExlService Holdings and Gates Industrial

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

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

Diversification Opportunities for ExlService Holdings and Gates Industrial

-0.76

Correlation Coefficient

ExlService Holdings  Gates Industrial

Pay attention - limited upside

The 3 months correlation between ExlService and Gates is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Gates Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gates Industrial 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 Gates Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gates Industrial has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Gates Industrial go up and down completely randomly.

Pair Corralation between ExlService Holdings and Gates Industrial

Given the investment horizon of 90 days ExlService Holdings is expected to under-perform the Gates Industrial. In addition to that, ExlService Holdings is 1.47 times more volatile than Gates Industrial. It trades about -0.13 of its total potential returns per unit of risk. Gates Industrial is currently generating about 0.04 per unit of volatility. If you would invest  2,368  in Gates Industrial on May 8, 2025 and sell it today you would earn a total of  25.00  from holding Gates Industrial or generate 1.06% return on investment over 90 days.

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

ExlService Holdings  vs.  Gates Industrial

ExlService Holdings

Risk-Adjusted Performance

Weakest

Over the last 90 days ExlService Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, ExlService Holdings is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Gates Industrial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gates Industrial are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Gates Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ExlService Holdings and Gates Industrial

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

The idea behind ExlService Holdings and Gates Industrial 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.