Correlation Between Innodata and Data Storage

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

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

Diversification Opportunities for Innodata and Data Storage

-0.36

Correlation Coefficient

Innodata  Data Storage

Very good diversification

The 3 months correlation between Innodata and Data is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and Data Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Storage 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 Data Storage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Storage has no effect on the direction of Innodata i.e., Innodata and Data Storage go up and down completely randomly.

Pair Corralation between Innodata and Data Storage

Given the investment horizon of 90 days Innodata is expected to generate 0.94 times more return on investment than Data Storage. However, Innodata is 1.06 times less risky than Data Storage. It trades about 0.02 of its potential returns per unit of risk. Data Storage is currently generating about -0.04 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Innodata  vs.  Data Storage

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.

Data Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Data Storage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Innodata and Data Storage

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

The idea behind Innodata and Data Storage 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.