Correlation Between Okta and Moonbae Steel
Can any of the company-specific risk be diversified away by investing in both Okta and Moonbae Steel 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 Moonbae Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Moonbae Steel, you can compare the effects of market volatilities on Okta and Moonbae Steel 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 Moonbae Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Moonbae Steel.
Diversification Opportunities for Okta and Moonbae Steel
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Okta and Moonbae is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel 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 Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of Okta i.e., Okta and Moonbae Steel go up and down completely randomly.
Pair Corralation between Okta and Moonbae Steel
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Moonbae Steel. In addition to that, Okta is 1.14 times more volatile than Moonbae Steel. It trades about -0.03 of its total potential returns per unit of risk. Moonbae Steel is currently generating about -0.03 per unit of volatility. If you would invest 282,000 in Moonbae Steel on August 29, 2024 and sell it today you would lose (25,000) from holding Moonbae Steel or give up 8.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.0% |
| Values | Daily Returns |
Okta Inc vs. Moonbae Steel
Performance |
| Timeline |
| Okta Inc |
| Moonbae Steel |
Okta and Moonbae Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Moonbae Steel
The main advantage of trading using opposite Okta and Moonbae Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Moonbae Steel 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 Moonbae Steel will offset losses from the drop in Moonbae Steel's long position.The idea behind Okta Inc and Moonbae Steel 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.| Moonbae Steel vs. LG Chemicals | Moonbae Steel vs. Lotte Chemical Corp | Moonbae Steel vs. Hyundai Steel | Moonbae Steel vs. Seah Steel Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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