Correlation Between Okta and UTI
Can any of the company-specific risk be diversified away by investing in both Okta and UTI 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 UTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and UTI Inc, you can compare the effects of market volatilities on Okta and UTI 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 UTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and UTI.
Diversification Opportunities for Okta and UTI
Very weak diversification
The 3 months correlation between Okta and UTI is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and UTI Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UTI Inc 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 UTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UTI Inc has no effect on the direction of Okta i.e., Okta and UTI go up and down completely randomly.
Pair Corralation between Okta and UTI
Given the investment horizon of 90 days Okta Inc is expected to generate 0.8 times more return on investment than UTI. However, Okta Inc is 1.24 times less risky than UTI. It trades about 0.03 of its potential returns per unit of risk. UTI Inc is currently generating about 0.02 per unit of risk. If you would invest 6,382 in Okta Inc on August 29, 2024 and sell it today you would earn a total of 1,301 from holding Okta Inc or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.37% |
| Values | Daily Returns |
Okta Inc vs. UTI Inc
Performance |
| Timeline |
| Okta Inc |
| UTI Inc |
Okta and UTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and UTI
The main advantage of trading using opposite Okta and UTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, UTI 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 UTI will offset losses from the drop in UTI's long position.The idea behind Okta Inc and UTI Inc 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.| UTI vs. Youngsin Metal Industrial | UTI vs. Echomarketing CoLtd | UTI vs. ABCO Electronics Co | UTI vs. Kukil Metal Co |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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