Correlation Between Ooma and Altigen Communications

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

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

Diversification Opportunities for Ooma and Altigen Communications

0.08

Correlation Coefficient

Ooma  Altigen Communications

Significant diversification

The 3 months correlation between Ooma and Altigen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ooma Inc and Altigen Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altigen Communications 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 Altigen Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altigen Communications has no effect on the direction of Ooma i.e., Ooma and Altigen Communications go up and down completely randomly.

Pair Corralation between Ooma and Altigen Communications

If you would invest  1,215  in Ooma Inc on September 22, 2024 and sell it today you would earn a total of  222.00  from holding Ooma Inc or generate 18.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.33%
Values	Daily Returns

Ooma Inc  vs.  Altigen Communications

Ooma Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ooma Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Ooma sustained solid returns over the last few months and may actually be approaching a breakup point.

Altigen Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altigen Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Altigen Communications is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ooma and Altigen Communications

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

The idea behind Ooma Inc and Altigen Communications 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.