Correlation Between Okta and Nan Ya
Can any of the company-specific risk be diversified away by investing in both Okta and Nan Ya 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 Nan Ya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Nan Ya Plastics, you can compare the effects of market volatilities on Okta and Nan Ya 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 Nan Ya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Nan Ya.
Diversification Opportunities for Okta and Nan Ya
Modest diversification
The 3 months correlation between Okta and Nan is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Nan Ya Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Ya Plastics 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 Nan Ya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Ya Plastics has no effect on the direction of Okta i.e., Okta and Nan Ya go up and down completely randomly.
Pair Corralation between Okta and Nan Ya
Given the investment horizon of 90 days Okta Inc is expected to generate 1.86 times more return on investment than Nan Ya. However, Okta is 1.86 times more volatile than Nan Ya Plastics. It trades about 0.02 of its potential returns per unit of risk. Nan Ya Plastics is currently generating about -0.12 per unit of risk. If you would invest 7,145 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 611.00 from holding Okta Inc or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.13% |
| Values | Daily Returns |
Okta Inc vs. Nan Ya Plastics
Performance |
| Timeline |
| Okta Inc |
| Nan Ya Plastics |
Okta and Nan Ya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Nan Ya
The main advantage of trading using opposite Okta and Nan Ya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Nan Ya 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 Nan Ya will offset losses from the drop in Nan Ya's long position.The idea behind Okta Inc and Nan Ya Plastics 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.| Nan Ya vs. Basso Industry Corp | Nan Ya vs. Chung Hsin Electric Machinery | Nan Ya vs. TYC Brother Industrial | Nan Ya vs. TECO Electric Machinery |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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