Correlation Between Latch and Otonomo Technologies

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

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

Diversification Opportunities for Latch and Otonomo Technologies

0.0

Correlation Coefficient

Latch  Otonomo Technologies

Pay attention - limited upside

The 3 months correlation between Latch and Otonomo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Latch Inc and Otonomo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otonomo Technologies and Latch 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 Latch Inc are associated (or correlated) with Otonomo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Otonomo Technologies has no effect on the direction of Latch i.e., Latch and Otonomo Technologies go up and down completely randomly.

Pair Corralation between Latch and Otonomo Technologies

Assuming the 90 days horizon Latch Inc is expected to generate 0.95 times more return on investment than Otonomo Technologies. However, Latch Inc is 1.05 times less risky than Otonomo Technologies. It trades about 0.13 of its potential returns per unit of risk. Otonomo Technologies is currently generating about 0.07 per unit of risk. If you would invest  7.60  in Latch Inc on October 11, 2024 and sell it today you would earn a total of  9.40  from holding Latch Inc or generate 123.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	67.72%
Values	Daily Returns

Latch Inc  vs.  Otonomo Technologies

Latch Inc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Latch Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical indicators, Latch is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Otonomo Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Otonomo Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Otonomo Technologies is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Latch and Otonomo Technologies

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

The idea behind Latch Inc and Otonomo Technologies 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..