Correlation Between Acco Brands and Innodata

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

By analyzing existing cross correlation between Acco Brands and Innodata, you can compare the effects of market volatilities on Acco Brands 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 Acco Brands with a short position of Innodata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Acco Brands and Innodata.

Diversification Opportunities for Acco Brands and Innodata

-0.23

Correlation Coefficient

Acco Brands  Innodata

Very good diversification

The 3 months correlation between Acco and Innodata is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Acco Brands and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Acco Brands 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 Acco Brands 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 Acco Brands i.e., Acco Brands and Innodata go up and down completely randomly.

Pair Corralation between Acco Brands and Innodata

Given the investment horizon of 90 days Acco Brands is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, Acco Brands is 2.47 times less risky than Innodata. The stock trades about -0.06 of its potential returns per unit of risk. The Innodata is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,209  in Innodata on December 29, 2024 and sell it today you would lose (470.00) from holding Innodata or give up 11.17% of portfolio value over 90 days.

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

Acco Brands  vs.  Innodata

Acco Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Acco Brands has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Innodata

Risk-Adjusted Performance

Very Weak

Over the last 90 days Innodata has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Innodata is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Acco Brands and Innodata

The main advantage of trading using opposite Acco Brands and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Acco Brands 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.

The idea behind Acco Brands and Innodata 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.