Correlation Between ATN International and Ooma

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

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

Diversification Opportunities for ATN International and Ooma

-0.43

Correlation Coefficient

ATN International  Ooma

Very good diversification

The 3 months correlation between ATN and Ooma is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ATN International and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and ATN International 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 ATN International are associated (or correlated) with Ooma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ooma Inc has no effect on the direction of ATN International i.e., ATN International and Ooma go up and down completely randomly.

Pair Corralation between ATN International and Ooma

Given the investment horizon of 90 days ATN International is expected to generate 1.61 times more return on investment than Ooma. However, ATN International is 1.61 times more volatile than Ooma Inc. It trades about 0.16 of its potential returns per unit of risk. Ooma Inc is currently generating about -0.03 per unit of risk. If you would invest  1,635  in ATN International on December 27, 2024 and sell it today you would earn a total of  477.00  from holding ATN International or generate 29.17% return on investment over 90 days.

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

ATN International  vs.  Ooma Inc

ATN International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ATN International are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, ATN International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ooma Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ooma Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Ooma is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ATN International and Ooma

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

The idea behind ATN International and Ooma Inc 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.