Correlation Between Okta and YG Entertainment
Can any of the company-specific risk be diversified away by investing in both Okta and YG Entertainment 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 YG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and YG Entertainment, you can compare the effects of market volatilities on Okta and YG Entertainment 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 YG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and YG Entertainment.
Diversification Opportunities for Okta and YG Entertainment
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and 122870 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and YG Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YG Entertainment 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 YG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YG Entertainment has no effect on the direction of Okta i.e., Okta and YG Entertainment go up and down completely randomly.
Pair Corralation between Okta and YG Entertainment
Given the investment horizon of 90 days Okta Inc is expected to generate 0.93 times more return on investment than YG Entertainment. However, Okta Inc is 1.07 times less risky than YG Entertainment. It trades about 0.02 of its potential returns per unit of risk. YG Entertainment is currently generating about 0.01 per unit of risk. If you would invest 6,803 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 847.00 from holding Okta Inc or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.06% |
| Values | Daily Returns |
Okta Inc vs. YG Entertainment
Performance |
| Timeline |
| Okta Inc |
| YG Entertainment |
Okta and YG Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and YG Entertainment
The main advantage of trading using opposite Okta and YG Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, YG Entertainment 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 YG Entertainment will offset losses from the drop in YG Entertainment's long position.The idea behind Okta Inc and YG Entertainment 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.| YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. Samsung Electronics Co | YG Entertainment vs. LG Energy Solution | YG Entertainment vs. SK Hynix |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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