Correlation Between Gates Industrial and ExlService Holdings

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

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

Diversification Opportunities for Gates Industrial and ExlService Holdings

-0.41

Correlation Coefficient

Gates Industrial  ExlService Holdings

Very good diversification

The 3 months correlation between Gates and ExlService is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Gates Industrial and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Gates Industrial 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 Gates Industrial 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 Gates Industrial i.e., Gates Industrial and ExlService Holdings go up and down completely randomly.

Pair Corralation between Gates Industrial and ExlService Holdings

Given the investment horizon of 90 days Gates Industrial is expected to generate 0.8 times more return on investment than ExlService Holdings. However, Gates Industrial is 1.25 times less risky than ExlService Holdings. It trades about 0.34 of its potential returns per unit of risk. ExlService Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,798  in Gates Industrial on April 29, 2025 and sell it today you would earn a total of  728.00  from holding Gates Industrial or generate 40.49% return on investment over 90 days.

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

Gates Industrial  vs.  ExlService Holdings

Gates Industrial

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Gates Industrial are ranked lower than 26 (%) 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.

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 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.

Pair Trading with Gates Industrial and ExlService Holdings

The main advantage of trading using opposite Gates Industrial and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gates Industrial 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 Gates Industrial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.