Correlation Between Okta and Atlas Copco
Can any of the company-specific risk be diversified away by investing in both Okta and Atlas Copco 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 Atlas Copco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Atlas Copco AB, you can compare the effects of market volatilities on Okta and Atlas Copco 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 Atlas Copco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Atlas Copco.
Diversification Opportunities for Okta and Atlas Copco
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Atlas is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of Okta i.e., Okta and Atlas Copco go up and down completely randomly.
Pair Corralation between Okta and Atlas Copco
Given the investment horizon of 90 days Okta Inc is expected to generate 1.96 times more return on investment than Atlas Copco. However, Okta is 1.96 times more volatile than Atlas Copco AB. It trades about 0.02 of its potential returns per unit of risk. Atlas Copco AB is currently generating about 0.03 per unit of risk. If you would invest 7,145 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 611.00 from holding Okta Inc or generate 8.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Okta Inc vs. Atlas Copco AB
Performance |
| Timeline |
| Okta Inc |
| Atlas Copco AB |
Okta and Atlas Copco Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Atlas Copco
The main advantage of trading using opposite Okta and Atlas Copco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Atlas Copco 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 Atlas Copco will offset losses from the drop in Atlas Copco's long position.The idea behind Okta Inc and Atlas Copco AB 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.| Atlas Copco vs. Sandvik AB | Atlas Copco vs. ASSA ABLOY AB | Atlas Copco vs. Alfa Laval AB | Atlas Copco vs. AB SKF |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |