Correlation Between ExlService Holdings and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both ExlService Holdings and EPAM Systems 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 EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ExlService Holdings and EPAM Systems, you can compare the effects of market volatilities on ExlService Holdings and EPAM Systems 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 EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExlService Holdings and EPAM Systems.
Diversification Opportunities for ExlService Holdings and EPAM Systems
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ExlService and EPAM is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems 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 EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and EPAM Systems go up and down completely randomly.
Pair Corralation between ExlService Holdings and EPAM Systems
Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.61 times more return on investment than EPAM Systems. However, ExlService Holdings is 1.64 times less risky than EPAM Systems. It trades about 0.04 of its potential returns per unit of risk. EPAM Systems is currently generating about -0.01 per unit of risk. If you would invest 3,557 in ExlService Holdings on August 30, 2024 and sell it today you would earn a total of 1,145 from holding ExlService Holdings or generate 32.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ExlService Holdings vs. EPAM Systems
Performance |
| Timeline |
| ExlService Holdings |
| EPAM Systems |
ExlService Holdings and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ExlService Holdings and EPAM Systems
The main advantage of trading using opposite ExlService Holdings and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings position performs unexpectedly, EPAM Systems 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| ExlService Holdings vs. Genpact Limited | ExlService Holdings vs. ASGN Inc | ExlService Holdings vs. TTEC Holdings | ExlService Holdings vs. WNS Holdings |
| EPAM Systems vs. Concentrix | EPAM Systems vs. Gartner | EPAM Systems vs. Accenture plc | EPAM Systems vs. International Business Machines |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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