Correlation Between Oblong and American Software

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

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

Diversification Opportunities for Oblong and American Software

-0.16

Correlation Coefficient

Oblong  American Software

Good diversification

The 3 months correlation between Oblong and American is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Oblong Inc and American Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Software and Oblong 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 Oblong Inc are associated (or correlated) with American Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Software has no effect on the direction of Oblong i.e., Oblong and American Software go up and down completely randomly.

Pair Corralation between Oblong and American Software

If you would invest  1,077  in American Software on September 2, 2024 and sell it today you would earn a total of  0.00  from holding American Software or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Oblong Inc  vs.  American Software

Oblong Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oblong Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak essential indicators, Oblong reported solid returns over the last few months and may actually be approaching a breakup point.

American Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic 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 Oblong and American Software

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

The idea behind Oblong Inc and American Software 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.