Comparison of daily volatility

profit although operating earnings always seem to be tantalisingly just around the corner according to management.

Should we compare the daily gyrations in the Ocado share price not with the FTSE 100 but with something much more risk-on, such as the Nasdaq 100 index?

At first glance, the Nasdaq is a better fit as it shows not only a higher proportion of down days overall but a higher number of 1.5% or more moves up and down than the FTSE.

Also, the magnitude of daily swings in the Nasdaq looks more like that of Ocado and the volatility of the index has increased markedly in the last six months although not quite to such an extreme level.

There is also a greater correlation between big daily moves up or down in Ocado and big moves in the Nasdaq: for example, in the week the benchmark jumped more than 9% (in November last year), Ocado shares put on 28%.

Yet there are still too many unexplained moves in the share price over the past 18 months for us to feel entirely comfortable saying Ocado is simply a proxy on the Nasdaq.

The bottom line for anyone considering buying the stock is it is much higher risk than it appears at first glance, and it seems to be driven more by sentiment than by fundamentals.

The share price is so volatile and unpredictable that unless you have nerves of steel and are prepared to put up with seeing your investment whittled away, it is not a stock we would recommend owning.

Ian Conway Companies Editor