Correlation Between Telephone and Ooma

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

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

Diversification Opportunities for Telephone and Ooma

0.42

Correlation Coefficient

Telephone  Ooma

Very weak diversification

The 3 months correlation between Telephone and Ooma is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Telephone and Data and Ooma Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ooma Inc and Telephone 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 Telephone and Data 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 Telephone i.e., Telephone and Ooma go up and down completely randomly.

Pair Corralation between Telephone and Ooma

Considering the 90-day investment horizon Telephone and Data is expected to generate 1.17 times more return on investment than Ooma. However, Telephone is 1.17 times more volatile than Ooma Inc. It trades about 0.11 of its potential returns per unit of risk. Ooma Inc is currently generating about -0.07 per unit of risk. If you would invest  3,397  in Telephone and Data on December 29, 2024 and sell it today you would earn a total of  479.00  from holding Telephone and Data or generate 14.1% return on investment over 90 days.

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

Telephone and Data  vs.  Ooma Inc

Telephone and Data

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telephone and Data are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal fundamental indicators, Telephone unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest unfluctuating performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Telephone and Ooma

The main advantage of trading using opposite Telephone and Ooma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telephone 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 Telephone and Data 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.