Correlation Between DXC Technology and Innodata

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

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

Diversification Opportunities for DXC Technology and Innodata

0.44

Correlation Coefficient

DXC Technology  Innodata

Very weak diversification

The 3 months correlation between DXC and Innodata is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding DXC Technology Co and Innodata in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innodata and DXC Technology 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 DXC Technology Co 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 DXC Technology i.e., DXC Technology and Innodata go up and down completely randomly.

Pair Corralation between DXC Technology and Innodata

Considering the 90-day investment horizon DXC Technology Co is expected to under-perform the Innodata. But the stock apears to be less risky and, when comparing its historical volatility, DXC Technology Co is 2.54 times less risky than Innodata. The stock trades about -0.01 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  829.00  in Innodata on February 11, 2024 and sell it today you would earn a total of  249.00  from holding Innodata or generate 30.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

DXC Technology Co  vs.  Innodata

DXC Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DXC Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Innodata

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innodata are ranked lower than 2 (%) 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.

Pair Trading with DXC Technology and Innodata

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

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.