Correlation Between Okta and NCsoft Corp
Can any of the company-specific risk be diversified away by investing in both Okta and NCsoft Corp 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 NCsoft Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and NCsoft Corp, you can compare the effects of market volatilities on Okta and NCsoft Corp 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 NCsoft Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and NCsoft Corp.
Diversification Opportunities for Okta and NCsoft Corp
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and NCsoft is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and NCsoft Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCsoft Corp 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 NCsoft Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCsoft Corp has no effect on the direction of Okta i.e., Okta and NCsoft Corp go up and down completely randomly.
Pair Corralation between Okta and NCsoft Corp
Given the investment horizon of 90 days Okta Inc is expected to generate 0.96 times more return on investment than NCsoft Corp. However, Okta Inc is 1.05 times less risky than NCsoft Corp. It trades about 0.12 of its potential returns per unit of risk. NCsoft Corp is currently generating about 0.03 per unit of risk. If you would invest 7,325 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. NCsoft Corp
Performance |
| Timeline |
| Okta Inc |
| NCsoft Corp |
Okta and NCsoft Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and NCsoft Corp
The main advantage of trading using opposite Okta and NCsoft Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, NCsoft Corp 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 NCsoft Corp will offset losses from the drop in NCsoft Corp's long position.The idea behind Okta Inc and NCsoft Corp 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.| NCsoft Corp vs. AfreecaTV Co | NCsoft Corp vs. SS TECH | NCsoft Corp vs. Busan Industrial Co | NCsoft Corp vs. Busan Ind |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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