Correlation Between Shotspotter and Otonomo Technologies

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

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

Diversification Opportunities for Shotspotter and Otonomo Technologies

-0.5

Correlation Coefficient

Shotspotter  Otonomo Technologies

Very good diversification

The 3 months correlation between Shotspotter and Otonomo is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Shotspotter and Otonomo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Otonomo Technologies and Shotspotter 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 Shotspotter 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 Shotspotter i.e., Shotspotter and Otonomo Technologies go up and down completely randomly.

Pair Corralation between Shotspotter and Otonomo Technologies

Given the investment horizon of 90 days Shotspotter is expected to under-perform the Otonomo Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Shotspotter is 1.21 times less risky than Otonomo Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Otonomo Technologies is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  44.00  in Otonomo Technologies on October 10, 2024 and sell it today you would lose (8.00) from holding Otonomo Technologies or give up 18.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	26.06%
Values	Daily Returns

Shotspotter  vs.  Otonomo Technologies

Shotspotter

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shotspotter are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Shotspotter demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 very healthy primary indicators, Otonomo Technologies is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shotspotter and Otonomo Technologies

The main advantage of trading using opposite Shotspotter and Otonomo Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shotspotter 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 Shotspotter 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.