Correlation Between Innodata and High Wire

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

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

Diversification Opportunities for Innodata and High Wire

-0.41

Correlation Coefficient

Innodata  High Wire

Very good diversification

The 3 months correlation between Innodata and High is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and High Wire Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on High Wire Networks 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 High Wire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of High Wire Networks has no effect on the direction of Innodata i.e., Innodata and High Wire go up and down completely randomly.

Pair Corralation between Innodata and High Wire

Given the investment horizon of 90 days Innodata is expected to generate 0.67 times more return on investment than High Wire. However, Innodata is 1.49 times less risky than High Wire. It trades about 0.18 of its potential returns per unit of risk. High Wire Networks is currently generating about 0.08 per unit of risk. If you would invest  1,546  in Innodata on September 4, 2024 and sell it today you would earn a total of  2,506  from holding Innodata or generate 162.1% return on investment over 90 days.

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

Innodata  vs.  High Wire Networks

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.

High Wire Networks

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in High Wire Networks are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, High Wire demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innodata and High Wire

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

The idea behind Innodata and High Wire Networks 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.