Correlation Between Innodata and Science Applications

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

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

Diversification Opportunities for Innodata and Science Applications

-0.5

Correlation Coefficient

Innodata  Science Applications

Very good diversification

The 3 months correlation between Innodata and Science is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Innodata and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications 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 Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Innodata i.e., Innodata and Science Applications go up and down completely randomly.

Pair Corralation between Innodata and Science Applications

Given the investment horizon of 90 days Innodata is expected to generate 2.44 times more return on investment than Science Applications. However, Innodata is 2.44 times more volatile than Science Applications International. It trades about 0.09 of its potential returns per unit of risk. Science Applications International is currently generating about -0.03 per unit of risk. If you would invest  3,925  in Innodata on May 1, 2025 and sell it today you would earn a total of  924.00  from holding Innodata or generate 23.54% return on investment over 90 days.

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

Innodata  vs.  Science Applications Internati

Innodata

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Innodata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Science Applications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Science Applications International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Science Applications is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Innodata and Science Applications

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

The idea behind Innodata and Science Applications International 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.