Correlation Between Okta and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Okta and Industrial Bank 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 Industrial Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Industrial Bank, you can compare the effects of market volatilities on Okta and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Industrial Bank.
Diversification Opportunities for Okta and Industrial Bank
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Industrial is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Okta i.e., Okta and Industrial Bank go up and down completely randomly.
Pair Corralation between Okta and Industrial Bank
Given the investment horizon of 90 days Okta is expected to generate 1.56 times less return on investment than Industrial Bank. In addition to that, Okta is 2.01 times more volatile than Industrial Bank. It trades about 0.03 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.11 per unit of volatility. If you would invest 1,039,884 in Industrial Bank on August 25, 2024 and sell it today you would earn a total of 440,116 from holding Industrial Bank or generate 42.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.05% |
| Values | Daily Returns |
Okta Inc vs. Industrial Bank
Performance |
| Timeline |
| Okta Inc |
| Industrial Bank |
Okta and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Industrial Bank
The main advantage of trading using opposite Okta and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.The idea behind Okta Inc and Industrial Bank 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.| Industrial Bank vs. Grand Korea Leisure | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. Display Tech Co | Industrial Bank vs. Osang Healthcare Co,Ltd |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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