Correlation Between ExlService Holdings and Hudson Global

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

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

Diversification Opportunities for ExlService Holdings and Hudson Global

-0.72

Correlation Coefficient

ExlService Holdings  Hudson Global

Pay attention - limited upside

The 3 months correlation between ExlService and Hudson is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Hudson Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hudson Global 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 Hudson Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hudson Global has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Hudson Global go up and down completely randomly.

Pair Corralation between ExlService Holdings and Hudson Global

Given the investment horizon of 90 days ExlService Holdings is expected to generate 24.47 times less return on investment than Hudson Global. But when comparing it to its historical volatility, ExlService Holdings is 27.98 times less risky than Hudson Global. It trades about 0.04 of its potential returns per unit of risk. Hudson Global is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,526  in Hudson Global on September 27, 2024 and sell it today you would lose (1,138) from holding Hudson Global or give up 45.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.32%
Values	Daily Returns

ExlService Holdings  vs.  Hudson Global

ExlService Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, ExlService Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hudson Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with ExlService Holdings and Hudson Global

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

The idea behind ExlService Holdings and Hudson Global 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.