Correlation Between Grid Dynamics and Innodata

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

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

Diversification Opportunities for Grid Dynamics and Innodata

0.63

Correlation Coefficient

Grid Dynamics  Innodata

Poor diversification

The 3 months correlation between Grid and Innodata is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Grid Dynamics Holdings and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Grid Dynamics 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 Grid Dynamics 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 Grid Dynamics i.e., Grid Dynamics and Innodata go up and down completely randomly.

Pair Corralation between Grid Dynamics and Innodata

Given the investment horizon of 90 days Grid Dynamics Holdings is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, Grid Dynamics Holdings is 2.08 times less risky than Innodata. The stock trades about -0.21 of its potential returns per unit of risk. The Innodata is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  3,674  in Innodata on February 3, 2025 and sell it today you would earn a total of  313.00  from holding Innodata or generate 8.52% return on investment over 90 days.

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

Grid Dynamics Holdings  vs.  Innodata

Grid Dynamics Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Grid Dynamics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Innodata

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 4 (%) 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 Grid Dynamics and Innodata

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

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.