Correlation Between CSP and Innodata

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

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

Diversification Opportunities for CSP and Innodata

0.01

Correlation Coefficient

CSP  Innodata

Significant diversification

The 3 months correlation between CSP and Innodata is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CSP Inc and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and CSP 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 CSP Inc 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 CSP i.e., CSP and Innodata go up and down completely randomly.

Pair Corralation between CSP and Innodata

Given the investment horizon of 90 days CSP Inc is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, CSP Inc is 1.85 times less risky than Innodata. The stock trades about -0.02 of its potential returns per unit of risk. The Innodata is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,209  in Innodata on December 28, 2024 and sell it today you would lose (226.00) from holding Innodata or give up 5.37% of portfolio value over 90 days.

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

CSP Inc  vs.  Innodata

CSP Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSP Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CSP is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Innodata

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Innodata may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with CSP and Innodata

The main advantage of trading using opposite CSP and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSP 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 CSP Inc 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.