Correlation Between Okta and Auddia
Can any of the company-specific risk be diversified away by investing in both Okta and Auddia 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 Auddia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Auddia Inc, you can compare the effects of market volatilities on Okta and Auddia 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 Auddia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Auddia.
Diversification Opportunities for Okta and Auddia
Modest diversification
The 3 months correlation between Okta and Auddia is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Auddia Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auddia 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 Auddia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auddia Inc has no effect on the direction of Okta i.e., Okta and Auddia go up and down completely randomly.
Pair Corralation between Okta and Auddia
Given the investment horizon of 90 days Okta is expected to generate 4.81 times less return on investment than Auddia. But when comparing it to its historical volatility, Okta Inc is 12.37 times less risky than Auddia. It trades about 0.12 of its potential returns per unit of risk. Auddia Inc is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.41 in Auddia Inc on August 24, 2024 and sell it today you would lose (0.54) from holding Auddia Inc or give up 15.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 60.87% |
| Values | Daily Returns |
Okta Inc vs. Auddia Inc
Performance |
| Timeline |
| Okta Inc |
| Auddia Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Okta and Auddia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Auddia
The main advantage of trading using opposite Okta and Auddia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Auddia 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 Auddia will offset losses from the drop in Auddia's long position.The idea behind Okta Inc and Auddia 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.| Auddia vs. ServiceNow | Auddia vs. Lululemon Athletica | Auddia vs. Payoneer Global | Auddia vs. Tandy Leather Factory |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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