Correlation Between Banxa Holdings and Innodata

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

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

Diversification Opportunities for Banxa Holdings and Innodata

0.83

Correlation Coefficient

Banxa Holdings  Innodata

Very poor diversification

The 3 months correlation between Banxa and Innodata is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Banxa Holdings and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Banxa Holdings 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 Banxa Holdings 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 Banxa Holdings i.e., Banxa Holdings and Innodata go up and down completely randomly.

Pair Corralation between Banxa Holdings and Innodata

Assuming the 90 days horizon Banxa Holdings is expected to generate 1.04 times more return on investment than Innodata. However, Banxa Holdings is 1.04 times more volatile than Innodata. It trades about 0.18 of its potential returns per unit of risk. Innodata is currently generating about 0.17 per unit of risk. If you would invest  24.00  in Banxa Holdings on September 12, 2024 and sell it today you would earn a total of  33.00  from holding Banxa Holdings or generate 137.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Banxa Holdings  vs.  Innodata

Banxa Holdings

Risk-Adjusted Performance

13 of 100

Good

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

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 Banxa Holdings and Innodata

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