Correlation Between Leidos Holdings and Innodata

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

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

Diversification Opportunities for Leidos Holdings and Innodata

-0.38

Correlation Coefficient

Leidos Holdings  Innodata

Very good diversification

The 3 months correlation between Leidos and Innodata is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Leidos Holdings and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Leidos 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 Leidos 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 Leidos Holdings i.e., Leidos Holdings and Innodata go up and down completely randomly.

Pair Corralation between Leidos Holdings and Innodata

Given the investment horizon of 90 days Leidos Holdings is expected to generate 5.94 times less return on investment than Innodata. But when comparing it to its historical volatility, Leidos Holdings is 5.07 times less risky than Innodata. It trades about 0.1 of its potential returns per unit of risk. Innodata is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Innodata on October 21, 2024 and sell it today you would earn a total of  3,038  from holding Innodata or generate 474.69% return on investment over 90 days.

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

Leidos Holdings  vs.  Innodata

Leidos Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leidos Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Innodata

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 10 (%) 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 Leidos Holdings and Innodata

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

Check out your portfolio center.

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 .