Correlation Between International Business and Innodata
Can any of the company-specific risk be diversified away by investing in both International Business and Innodata 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 International Business and Innodata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Business Machines and Innodata, you can compare the effects of market volatilities on International Business and Innodata 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 International Business with a short position of Innodata. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Business and Innodata.
Diversification Opportunities for International Business and Innodata
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between International and Innodata is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and International Business 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 International Business Machines are associated (or correlated) with Innodata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innodata has no effect on the direction of International Business i.e., International Business and Innodata go up and down completely randomly.
Pair Corralation between International Business and Innodata
Considering the 90-day investment horizon International Business Machines is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, International Business Machines is 8.35 times less risky than Innodata. The stock trades about -0.08 of its potential returns per unit of risk. The Innodata is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,897 in Innodata on August 24, 2024 and sell it today you would earn a total of 2,726 from holding Innodata or generate 143.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Business Machine vs. Innodata
Performance |
| Timeline |
| International Business |
| Innodata |
International Business and Innodata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Business and Innodata
The main advantage of trading using opposite International Business and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Business position performs unexpectedly, Innodata 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 Innodata will offset losses from the drop in Innodata's long position.| International Business vs. CDW Corp | International Business vs. Eshallgo Class A | International Business vs. Amtech Systems | International Business vs. Gold Fields Ltd |
| Innodata vs. ASGN Inc | Innodata vs. Formula Systems 1985 | Innodata vs. FiscalNote Holdings | Innodata vs. International Business Machines |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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