Correlation Between Nucleus Software and Hexaware Technologies

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

By analyzing existing cross correlation between Nucleus Software Exports and Hexaware Technologies Limited, you can compare the effects of market volatilities on Nucleus Software and Hexaware Technologies 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 Nucleus Software with a short position of Hexaware Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nucleus Software and Hexaware Technologies.

Diversification Opportunities for Nucleus Software and Hexaware Technologies

0.76

Correlation Coefficient

Nucleus Software  Hexaware Technologies

Poor diversification

The 3 months correlation between Nucleus and Hexaware is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nucleus Software Exports and Hexaware Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexaware Technologies and Nucleus Software 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 Nucleus Software Exports are associated (or correlated) with Hexaware Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexaware Technologies has no effect on the direction of Nucleus Software i.e., Nucleus Software and Hexaware Technologies go up and down completely randomly.

Pair Corralation between Nucleus Software and Hexaware Technologies

Assuming the 90 days trading horizon Nucleus Software Exports is expected to generate 1.73 times more return on investment than Hexaware Technologies. However, Nucleus Software is 1.73 times more volatile than Hexaware Technologies Limited. It trades about 0.12 of its potential returns per unit of risk. Hexaware Technologies Limited is currently generating about 0.16 per unit of risk. If you would invest  87,316  in Nucleus Software Exports on April 25, 2025 and sell it today you would earn a total of  22,644  from holding Nucleus Software Exports or generate 25.93% return on investment over 90 days.

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

Nucleus Software Exports  vs.  Hexaware Technologies Limited

Nucleus Software Exports

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nucleus Software Exports are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Nucleus Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Hexaware Technologies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hexaware Technologies Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Hexaware Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nucleus Software and Hexaware Technologies

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

The idea behind Nucleus Software Exports and Hexaware Technologies Limited 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.