Correlation Between Okta and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Okta and FNC 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 FNC 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 FNC Entertainment Co, you can compare the effects of market volatilities on Okta and FNC 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 FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and FNC Entertainment.
Diversification Opportunities for Okta and FNC Entertainment
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and FNC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Okta i.e., Okta and FNC Entertainment go up and down completely randomly.
Pair Corralation between Okta and FNC Entertainment
Given the investment horizon of 90 days Okta Inc is expected to generate 1.14 times more return on investment than FNC Entertainment. However, Okta is 1.14 times more volatile than FNC Entertainment Co. It trades about -0.01 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about -0.07 per unit of risk. If you would invest 8,691 in Okta Inc on August 25, 2024 and sell it today you would lose (1,034) from holding Okta Inc or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.79% |
| Values | Daily Returns |
Okta Inc vs. FNC Entertainment Co
Performance |
| Timeline |
| Okta Inc |
| FNC Entertainment |
Okta and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and FNC Entertainment
The main advantage of trading using opposite Okta and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, FNC 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.The idea behind Okta Inc and FNC Entertainment Co 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.| FNC Entertainment vs. SM Entertainment Co | FNC Entertainment vs. LG Chemicals | FNC Entertainment vs. Cube Entertainment | FNC Entertainment vs. Daejung Chemicals Metals |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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