Correlation Between EPAM Systems and ExlService Holdings
Can any of the company-specific risk be diversified away by investing in both EPAM Systems 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 EPAM Systems and ExlService Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and ExlService Holdings, you can compare the effects of market volatilities on EPAM Systems 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 EPAM Systems with a short position of ExlService Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and ExlService Holdings.
Diversification Opportunities for EPAM Systems and ExlService Holdings
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EPAM and ExlService is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and EPAM Systems 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 EPAM Systems 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 EPAM Systems i.e., EPAM Systems and ExlService Holdings go up and down completely randomly.
Pair Corralation between EPAM Systems and ExlService Holdings
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the ExlService Holdings. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.26 times less risky than ExlService Holdings. The stock trades about -0.3 of its potential returns per unit of risk. The ExlService Holdings is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 3,083 in ExlService Holdings on January 26, 2024 and sell it today you would lose (126.00) from holding ExlService Holdings or give up 4.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EPAM Systems vs. ExlService Holdings
Performance |
| Timeline |
| EPAM Systems |
| ExlService Holdings |
EPAM Systems and ExlService Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EPAM Systems and ExlService Holdings
The main advantage of trading using opposite EPAM Systems and ExlService Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems 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.| EPAM Systems vs. CACI International | EPAM Systems vs. CDW Corp | EPAM Systems vs. Jack Henry Associates | EPAM Systems vs. Broadridge Financial Solutions |
| ExlService Holdings vs. CACI International | ExlService Holdings vs. CDW Corp | ExlService Holdings vs. Jack Henry Associates | ExlService Holdings vs. Broadridge Financial Solutions |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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