Correlation Between Information Services and Innodata
Can any of the company-specific risk be diversified away by investing in both Information Services 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 Information Services and Innodata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Information Services Group and Innodata, you can compare the effects of market volatilities on Information Services 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 Information Services with a short position of Innodata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Information Services and Innodata.
Diversification Opportunities for Information Services and Innodata
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Information and Innodata is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Group and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Information Services 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 Information Services Group 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 Information Services i.e., Information Services and Innodata go up and down completely randomly.
Pair Corralation between Information Services and Innodata
Considering the 90-day investment horizon Information Services Group is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, Information Services Group is 3.4 times less risky than Innodata. The stock trades about -0.03 of its potential returns per unit of risk. The Innodata is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,088 in Innodata on August 31, 2024 and sell it today you would earn a total of 3,020 from holding Innodata or generate 277.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Information Services Group vs. Innodata
Performance |
| Timeline |
| Information Services |
| Innodata |
Information Services and Innodata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Information Services and Innodata
The main advantage of trading using opposite Information Services and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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.| Information Services vs. Formula Systems 1985 | Information Services vs. CSP Inc | Information Services vs. Nayax | Information Services vs. The Hackett Group |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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