Correlation Between Cogent Communications and Ooma

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

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

Diversification Opportunities for Cogent Communications and Ooma

0.85

Correlation Coefficient

Cogent Communications  Ooma

Very poor diversification

The 3 months correlation between Cogent and Ooma is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and Cogent Communications 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 Cogent Communications Group 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 Cogent Communications i.e., Cogent Communications and Ooma go up and down completely randomly.

Pair Corralation between Cogent Communications and Ooma

Given the investment horizon of 90 days Cogent Communications Group is expected to under-perform the Ooma. In addition to that, Cogent Communications is 1.15 times more volatile than Ooma Inc. It trades about -0.14 of its total potential returns per unit of risk. Ooma Inc is currently generating about -0.04 per unit of volatility. If you would invest  1,421  in Ooma Inc on December 28, 2024 and sell it today you would lose (75.00) from holding Ooma Inc or give up 5.28% of portfolio value over 90 days.

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

Cogent Communications Group  vs.  Ooma Inc

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Cogent Communications and Ooma

The main advantage of trading using opposite Cogent Communications and Ooma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications 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 Cogent Communications Group 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.