Correlation Between Innodata and Banxa Holdings

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

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

Diversification Opportunities for Innodata and Banxa Holdings

0.83

Correlation Coefficient

Innodata  Banxa Holdings

Very poor diversification

The 3 months correlation between Innodata and Banxa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and Banxa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banxa Holdings 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 Banxa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banxa Holdings has no effect on the direction of Innodata i.e., Innodata and Banxa Holdings go up and down completely randomly.

Pair Corralation between Innodata and Banxa Holdings

Given the investment horizon of 90 days Innodata is expected to under-perform the Banxa Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Innodata is 1.72 times less risky than Banxa Holdings. The stock trades about -0.1 of its potential returns per unit of risk. The Banxa Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  64.00  in Banxa Holdings on September 13, 2024 and sell it today you would lose (9.00) from holding Banxa Holdings or give up 14.06% of portfolio value over 90 days.

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

Innodata  vs.  Banxa Holdings

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.

Banxa Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Banxa Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Banxa Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innodata and Banxa Holdings

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

The idea behind Innodata and Banxa Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .