Correlation Between ExlService Holdings and Insperity

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

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

Diversification Opportunities for ExlService Holdings and Insperity

-0.66

Correlation Coefficient

ExlService Holdings  Insperity

Excellent diversification

The 3 months correlation between ExlService and Insperity is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Insperity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insperity 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 Insperity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insperity has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Insperity go up and down completely randomly.

Pair Corralation between ExlService Holdings and Insperity

Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.79 times more return on investment than Insperity. However, ExlService Holdings is 1.26 times less risky than Insperity. It trades about 0.04 of its potential returns per unit of risk. Insperity is currently generating about -0.02 per unit of risk. If you would invest  3,449  in ExlService Holdings on September 23, 2024 and sell it today you would earn a total of  1,021  from holding ExlService Holdings or generate 29.6% return on investment over 90 days.

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

ExlService Holdings  vs.  Insperity

ExlService Holdings

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 16 (%) 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.

Insperity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insperity has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with ExlService Holdings and Insperity

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

The idea behind ExlService Holdings and Insperity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.