Correlation Between Okta and Lotte Chilsung
Can any of the company-specific risk be diversified away by investing in both Okta and Lotte Chilsung 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 Okta and Lotte Chilsung into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Lotte Chilsung Beverage, you can compare the effects of market volatilities on Okta and Lotte Chilsung 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 Okta with a short position of Lotte Chilsung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Lotte Chilsung.
Diversification Opportunities for Okta and Lotte Chilsung
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Lotte is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Lotte Chilsung Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chilsung Beverage and Okta 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 Okta Inc are associated (or correlated) with Lotte Chilsung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chilsung Beverage has no effect on the direction of Okta i.e., Okta and Lotte Chilsung go up and down completely randomly.
Pair Corralation between Okta and Lotte Chilsung
Given the investment horizon of 90 days Okta Inc is expected to generate 0.86 times more return on investment than Lotte Chilsung. However, Okta Inc is 1.16 times less risky than Lotte Chilsung. It trades about 0.15 of its potential returns per unit of risk. Lotte Chilsung Beverage is currently generating about 0.12 per unit of risk. If you would invest 7,240 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 402.00 from holding Okta Inc or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Lotte Chilsung Beverage
Performance |
| Timeline |
| Okta Inc |
| Lotte Chilsung Beverage |
Okta and Lotte Chilsung Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Lotte Chilsung
The main advantage of trading using opposite Okta and Lotte Chilsung positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Lotte Chilsung 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 Lotte Chilsung will offset losses from the drop in Lotte Chilsung's long position.The idea behind Okta Inc and Lotte Chilsung Beverage 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.| Lotte Chilsung vs. Korea Real Estate | Lotte Chilsung vs. Korea Ratings Co | Lotte Chilsung vs. IQuest Co | Lotte Chilsung vs. Wonbang Tech Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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