Correlation Between Otonomo Technologies and Latch

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

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

Diversification Opportunities for Otonomo Technologies and Latch

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Correlation Coefficient

Otonomo Technologies  Latch

Pay attention - limited upside

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

Pair Corralation between Otonomo Technologies and Latch

Assuming the 90 days horizon Otonomo Technologies is expected to generate 1.71 times less return on investment than Latch. In addition to that, Otonomo Technologies is 1.05 times more volatile than Latch Inc. It trades about 0.07 of its total potential returns per unit of risk. Latch Inc is currently generating about 0.13 per unit of volatility. 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

Otonomo Technologies  vs.  Latch Inc

Otonomo Technologies

Risk-Adjusted Performance

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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.

Latch Inc

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Otonomo Technologies and Latch

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

The idea behind Otonomo Technologies and Latch 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.