Correlation Between Gartner and Innodata

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

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

Diversification Opportunities for Gartner and Innodata

0.52

Correlation Coefficient

Gartner  Innodata

Very weak diversification

The 3 months correlation between Gartner and Innodata is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Gartner and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and Gartner 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 Gartner 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 Gartner i.e., Gartner and Innodata go up and down completely randomly.

Pair Corralation between Gartner and Innodata

Allowing for the 90-day total investment horizon Gartner is expected to generate 26.56 times less return on investment than Innodata. But when comparing it to its historical volatility, Gartner is 11.96 times less risky than Innodata. It trades about 0.15 of its potential returns per unit of risk. Innodata is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  1,709  in Innodata on August 15, 2024 and sell it today you would earn a total of  2,890  from holding Innodata or generate 169.1% return on investment over 90 days.

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

Gartner  vs.  Innodata

Gartner

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gartner are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Gartner unveiled 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 fragile basic indicators, Innodata exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gartner and Innodata

The main advantage of trading using opposite Gartner and Innodata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gartner 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 Gartner 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 Transaction History module to view history of all your transactions and understand their impact on performance.