Correlation Between BloomZ Ordinary and Innodata

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

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

Diversification Opportunities for BloomZ Ordinary and Innodata

-0.48

Correlation Coefficient

BloomZ Ordinary  Innodata

Very good diversification

The 3 months correlation between BloomZ and Innodata is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BloomZ Ordinary Shares and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and BloomZ Ordinary 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 BloomZ Ordinary Shares 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 BloomZ Ordinary i.e., BloomZ Ordinary and Innodata go up and down completely randomly.

Pair Corralation between BloomZ Ordinary and Innodata

Given the investment horizon of 90 days BloomZ Ordinary is expected to generate 2.61 times less return on investment than Innodata. In addition to that, BloomZ Ordinary is 1.93 times more volatile than Innodata. It trades about 0.03 of its total potential returns per unit of risk. Innodata is currently generating about 0.16 per unit of volatility. If you would invest  1,728  in Innodata on August 30, 2024 and sell it today you would earn a total of  2,105  from holding Innodata or generate 121.82% return on investment over 90 days.

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

BloomZ Ordinary Shares  vs.  Innodata

BloomZ Ordinary Shares

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BloomZ Ordinary Shares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak primary indicators, BloomZ Ordinary showed solid returns over the last few months and may actually be approaching a breakup point.

Innodata

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Innodata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BloomZ Ordinary and Innodata

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

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.