Correlation Between Nayax and Innodata

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

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

Diversification Opportunities for Nayax and Innodata

0.72

Correlation Coefficient

Nayax  Innodata

Poor diversification

The 3 months correlation between Nayax and Innodata is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nayax and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Nayax 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 Nayax 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 Nayax i.e., Nayax and Innodata go up and down completely randomly.

Pair Corralation between Nayax and Innodata

Given the investment horizon of 90 days Nayax is expected to generate 5.52 times less return on investment than Innodata. But when comparing it to its historical volatility, Nayax is 3.57 times less risky than Innodata. It trades about 0.12 of its potential returns per unit of risk. Innodata is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,591  in Innodata on September 3, 2024 and sell it today you would earn a total of  2,461  from holding Innodata or generate 154.68% return on investment over 90 days.

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

Nayax  vs.  Innodata

Nayax

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nayax are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nayax showed solid returns over the last few months and may actually be approaching a breakup point.

Innodata

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, Innodata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nayax and Innodata

The main advantage of trading using opposite Nayax and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nayax 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 Nayax 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.