Correlation Between Ooma and KT

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

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

Diversification Opportunities for Ooma and KT

0.7

Correlation Coefficient

Ooma  KT

Poor diversification

The 3 months correlation between Ooma and KT is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ooma Inc and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation 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 KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Ooma i.e., Ooma and KT go up and down completely randomly.

Pair Corralation between Ooma and KT

Given the investment horizon of 90 days Ooma Inc is expected to generate 0.77 times more return on investment than KT. However, Ooma Inc is 1.29 times less risky than KT. It trades about 0.34 of its potential returns per unit of risk. KT Corporation is currently generating about 0.26 per unit of risk. If you would invest  1,243  in Ooma Inc on August 31, 2024 and sell it today you would earn a total of  203.00  from holding Ooma Inc or generate 16.33% return on investment over 90 days.

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

Ooma Inc  vs.  KT Corp.

Ooma Inc

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ooma Inc are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Ooma sustained solid returns over the last few months and may actually be approaching a breakup point.

KT Corporation

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in KT Corporation are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, KT unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ooma and KT

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

The idea behind Ooma Inc and KT Corporation 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.