Correlation Between Okta and New Advanced
Can any of the company-specific risk be diversified away by investing in both Okta and New Advanced 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 New Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and New Advanced Electronics, you can compare the effects of market volatilities on Okta and New Advanced 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 New Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and New Advanced.
Diversification Opportunities for Okta and New Advanced
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and New is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and New Advanced Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Advanced Electronics 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 New Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Advanced Electronics has no effect on the direction of Okta i.e., Okta and New Advanced go up and down completely randomly.
Pair Corralation between Okta and New Advanced
Given the investment horizon of 90 days Okta Inc is expected to under-perform the New Advanced. But the stock apears to be less risky and, when comparing its historical volatility, Okta Inc is 1.12 times less risky than New Advanced. The stock trades about -0.08 of its potential returns per unit of risk. The New Advanced Electronics is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 7,350 in New Advanced Electronics on August 29, 2024 and sell it today you would lose (1,990) from holding New Advanced Electronics or give up 27.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Okta Inc vs. New Advanced Electronics
Performance |
| Timeline |
| Okta Inc |
| New Advanced Electronics |
Okta and New Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and New Advanced
The main advantage of trading using opposite Okta and New Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, New Advanced 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 New Advanced will offset losses from the drop in New Advanced's long position.The idea behind Okta Inc and New Advanced Electronics 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.| New Advanced vs. Syntek Semiconductor Co | New Advanced vs. Powerchip Semiconductor Manufacturing | New Advanced vs. Realtek Semiconductor Corp | New Advanced vs. FarGlory Hotel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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