Correlation Between Innodata and EPAM Systems
Can any of the company-specific risk be diversified away by investing in both Innodata and EPAM Systems 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 Innodata and EPAM Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innodata and EPAM Systems, you can compare the effects of market volatilities on Innodata and EPAM Systems 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 Innodata with a short position of EPAM Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innodata and EPAM Systems.
Diversification Opportunities for Innodata and EPAM Systems
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Innodata and EPAM is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and EPAM Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPAM Systems and Innodata 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 Innodata are associated (or correlated) with EPAM Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPAM Systems has no effect on the direction of Innodata i.e., Innodata and EPAM Systems go up and down completely randomly.
Pair Corralation between Innodata and EPAM Systems
Given the investment horizon of 90 days Innodata is expected to generate 4.57 times more return on investment than EPAM Systems. However, Innodata is 4.57 times more volatile than EPAM Systems. It trades about 0.26 of its potential returns per unit of risk. EPAM Systems is currently generating about 0.34 per unit of risk. If you would invest 2,011 in Innodata on September 1, 2024 and sell it today you would earn a total of 2,097 from holding Innodata or generate 104.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innodata vs. EPAM Systems
Performance |
| Timeline |
| Innodata |
| EPAM Systems |
Innodata and EPAM Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innodata and EPAM Systems
The main advantage of trading using opposite Innodata and EPAM Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innodata position performs unexpectedly, EPAM Systems 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 EPAM Systems will offset losses from the drop in EPAM Systems' long position.| Innodata vs. ASGN Inc | Innodata vs. Formula Systems 1985 | Innodata vs. FiscalNote Holdings | Innodata vs. International Business Machines |
| EPAM Systems vs. FiscalNote Holdings | EPAM Systems vs. Innodata | EPAM Systems vs. Aurora Innovation | EPAM Systems vs. Conduent |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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