Correlation Between Hudson Technologies and Innodata

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

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

Diversification Opportunities for Hudson Technologies and Innodata

-0.85

Correlation Coefficient

Hudson Technologies  Innodata

Pay attention - limited upside

The 3 months correlation between Hudson and Innodata is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Hudson Technologies and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Hudson Technologies 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 Hudson Technologies 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 Hudson Technologies i.e., Hudson Technologies and Innodata go up and down completely randomly.

Pair Corralation between Hudson Technologies and Innodata

Given the investment horizon of 90 days Hudson Technologies is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, Hudson Technologies is 2.91 times less risky than Innodata. The stock trades about -0.13 of its potential returns per unit of risk. The Innodata is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,728  in Innodata on August 30, 2024 and sell it today you would earn a total of  2,105  from holding Innodata or generate 121.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Hudson Technologies  vs.  Innodata

Hudson Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hudson Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Innodata

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 12 (%) 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 Hudson Technologies and Innodata

The main advantage of trading using opposite Hudson Technologies and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hudson Technologies 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 Hudson Technologies 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.