Correlation Between Okta and Alpha Star
Can any of the company-specific risk be diversified away by investing in both Okta and Alpha Star 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 Alpha Star into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Alpha Star Acquisition, you can compare the effects of market volatilities on Okta and Alpha Star 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 Alpha Star. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Alpha Star.
Diversification Opportunities for Okta and Alpha Star
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Okta and Alpha is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Alpha Star Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Star Acquisition 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 Alpha Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Star Acquisition has no effect on the direction of Okta i.e., Okta and Alpha Star go up and down completely randomly.
Pair Corralation between Okta and Alpha Star
Given the investment horizon of 90 days Okta Inc is expected to generate 2.56 times more return on investment than Alpha Star. However, Okta is 2.56 times more volatile than Alpha Star Acquisition. It trades about 0.03 of its potential returns per unit of risk. Alpha Star Acquisition is currently generating about 0.04 per unit of risk. If you would invest 6,442 in Okta Inc on August 30, 2024 and sell it today you would earn a total of 1,241 from holding Okta Inc or generate 19.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.52% |
| Values | Daily Returns |
Okta Inc vs. Alpha Star Acquisition
Performance |
| Timeline |
| Okta Inc |
| Alpha Star Acquisition |
Okta and Alpha Star Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Alpha Star
The main advantage of trading using opposite Okta and Alpha Star positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Alpha Star 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 Alpha Star will offset losses from the drop in Alpha Star's long position.The idea behind Okta Inc and Alpha Star Acquisition 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.| Alpha Star vs. A SPAC II | Alpha Star vs. Alpha One | Alpha Star vs. Athena Technology Acquisition | Alpha Star vs. Patria Latin American |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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