Correlation Between American Virtual and Innodata

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

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

Diversification Opportunities for American Virtual and Innodata

-0.51

Correlation Coefficient

American Virtual  Innodata

Excellent diversification

The 3 months correlation between American and Innodata is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Virtual Cloud and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and American Virtual 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 American Virtual Cloud 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 American Virtual i.e., American Virtual and Innodata go up and down completely randomly.

Pair Corralation between American Virtual and Innodata

If you would invest  1,570  in Innodata on September 13, 2024 and sell it today you would earn a total of  2,203  from holding Innodata or generate 140.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

American Virtual Cloud  vs.  Innodata

American Virtual Cloud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Virtual Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Virtual is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Innodata

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Innodata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Virtual and Innodata

The main advantage of trading using opposite American Virtual and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Virtual 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 American Virtual Cloud 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.