Correlation Between ExlService Holdings and Thoughtworks Holding
Can any of the company-specific risk be diversified away by investing in both ExlService Holdings and Thoughtworks Holding 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 Thoughtworks Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ExlService Holdings and Thoughtworks Holding, you can compare the effects of market volatilities on ExlService Holdings and Thoughtworks Holding 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 Thoughtworks Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExlService Holdings and Thoughtworks Holding.
Diversification Opportunities for ExlService Holdings and Thoughtworks Holding
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ExlService and Thoughtworks is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding 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 Thoughtworks Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoughtworks Holding has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Thoughtworks Holding go up and down completely randomly.
Pair Corralation between ExlService Holdings and Thoughtworks Holding
Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.41 times more return on investment than Thoughtworks Holding. However, ExlService Holdings is 2.42 times less risky than Thoughtworks Holding. It trades about 0.05 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about -0.03 per unit of risk. If you would invest 3,375 in ExlService Holdings on October 20, 2024 and sell it today you would earn a total of 1,340 from holding ExlService Holdings or generate 39.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 91.31% |
| Values | Daily Returns |
ExlService Holdings vs. Thoughtworks Holding
Performance |
| Timeline |
| ExlService Holdings |
| Thoughtworks Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
ExlService Holdings and Thoughtworks Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ExlService Holdings and Thoughtworks Holding
The main advantage of trading using opposite ExlService Holdings and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings position performs unexpectedly, Thoughtworks Holding 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 Thoughtworks Holding will offset losses from the drop in Thoughtworks Holding's long position.| ExlService Holdings vs. Genpact Limited | ExlService Holdings vs. ASGN Inc | ExlService Holdings vs. TTEC Holdings | ExlService Holdings vs. WNS Holdings |
| Thoughtworks Holding vs. ExlService Holdings | Thoughtworks Holding vs. Genpact Limited | Thoughtworks Holding vs. ASGN Inc | Thoughtworks Holding vs. TTEC Holdings |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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