Correlation Between Okta and Wintec
Can any of the company-specific risk be diversified away by investing in both Okta and Wintec 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 Wintec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Wintec Co, you can compare the effects of market volatilities on Okta and Wintec 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 Wintec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Wintec.
Diversification Opportunities for Okta and Wintec
Good diversification
The 3 months correlation between Okta and Wintec is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Wintec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintec 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 Wintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintec has no effect on the direction of Okta i.e., Okta and Wintec go up and down completely randomly.
Pair Corralation between Okta and Wintec
Given the investment horizon of 90 days Okta Inc is expected to generate 0.46 times more return on investment than Wintec. However, Okta Inc is 2.18 times less risky than Wintec. It trades about 0.12 of its potential returns per unit of risk. Wintec Co is currently generating about 0.05 per unit of risk. If you would invest 7,325 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 325.00 from holding Okta Inc or generate 4.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Okta Inc vs. Wintec Co
Performance |
| Timeline |
| Okta Inc |
| Wintec |
Okta and Wintec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Wintec
The main advantage of trading using opposite Okta and Wintec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Wintec 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 Wintec will offset losses from the drop in Wintec's long position.The idea behind Okta Inc and Wintec 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.| Wintec vs. Busan Industrial Co | Wintec vs. Busan Ind | Wintec vs. Mirae Asset Daewoo | Wintec vs. Shinhan WTI Futures |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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