Correlation Between Okta and Kaulin Mfg
Can any of the company-specific risk be diversified away by investing in both Okta and Kaulin Mfg 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 Kaulin Mfg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Kaulin Mfg, you can compare the effects of market volatilities on Okta and Kaulin Mfg 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 Kaulin Mfg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Kaulin Mfg.
Diversification Opportunities for Okta and Kaulin Mfg
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Kaulin is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Kaulin Mfg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaulin Mfg 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 Kaulin Mfg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaulin Mfg has no effect on the direction of Okta i.e., Okta and Kaulin Mfg go up and down completely randomly.
Pair Corralation between Okta and Kaulin Mfg
Given the investment horizon of 90 days Okta is expected to generate 2.32 times less return on investment than Kaulin Mfg. But when comparing it to its historical volatility, Okta Inc is 1.87 times less risky than Kaulin Mfg. It trades about 0.06 of its potential returns per unit of risk. Kaulin Mfg is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,470 in Kaulin Mfg on August 28, 2024 and sell it today you would earn a total of 120.00 from holding Kaulin Mfg or generate 8.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.67% |
| Values | Daily Returns |
Okta Inc vs. Kaulin Mfg
Performance |
| Timeline |
| Okta Inc |
| Kaulin Mfg |
Okta and Kaulin Mfg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Kaulin Mfg
The main advantage of trading using opposite Okta and Kaulin Mfg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Kaulin Mfg 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 Kaulin Mfg will offset losses from the drop in Kaulin Mfg's long position.The idea behind Okta Inc and Kaulin Mfg 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.| Kaulin Mfg vs. Sunny Friend Environmental | Kaulin Mfg vs. TTET Union Corp | Kaulin Mfg vs. ECOVE Environment Corp | Kaulin Mfg vs. Yulon Finance 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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