Correlation Between Ooma and ATN International

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

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

Diversification Opportunities for Ooma and ATN International

-0.43

Correlation Coefficient

Ooma  ATN International

Very good diversification

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

Pair Corralation between Ooma and ATN International

Given the investment horizon of 90 days Ooma Inc is expected to under-perform the ATN International. But the stock apears to be less risky and, when comparing its historical volatility, Ooma Inc is 1.61 times less risky than ATN International. The stock trades about -0.03 of its potential returns per unit of risk. The ATN International is currently generating about 0.16 of returns per unit of risk over similar time horizon. 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

Ooma Inc  vs.  ATN International

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.

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.

Pair Trading with Ooma and ATN International

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

The idea behind Ooma Inc and ATN International 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.