Correlation Between Innodata and Brinks

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

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

Diversification Opportunities for Innodata and Brinks

0.06

Correlation Coefficient

Innodata  Brinks

Significant diversification

The 3 months correlation between Innodata and Brinks is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and Brinks Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brinks Company and Innodata 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 Innodata are associated (or correlated) with Brinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brinks Company has no effect on the direction of Innodata i.e., Innodata and Brinks go up and down completely randomly.

Pair Corralation between Innodata and Brinks

Given the investment horizon of 90 days Innodata is expected to generate 4.06 times more return on investment than Brinks. However, Innodata is 4.06 times more volatile than Brinks Company. It trades about 0.01 of its potential returns per unit of risk. Brinks Company is currently generating about -0.04 per unit of risk. 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 Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Innodata  vs.  Brinks Company

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.

Brinks Company

Risk-Adjusted Performance

Very Weak

Over the last 90 days Brinks Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Brinks is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Innodata and Brinks

The main advantage of trading using opposite Innodata and Brinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innodata position performs unexpectedly, Brinks 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 Brinks will offset losses from the drop in Brinks' long position.

The idea behind Innodata and Brinks Company 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.