Correlation Between Okta and Central Retail
Can any of the company-specific risk be diversified away by investing in both Okta and Central Retail 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 Central Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Central Retail, you can compare the effects of market volatilities on Okta and Central Retail 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 Central Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Central Retail.
Diversification Opportunities for Okta and Central Retail
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Central is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Central Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Retail 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 Central Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Retail has no effect on the direction of Okta i.e., Okta and Central Retail go up and down completely randomly.
Pair Corralation between Okta and Central Retail
Given the investment horizon of 90 days Okta is expected to generate 2.35 times less return on investment than Central Retail. But when comparing it to its historical volatility, Okta Inc is 1.21 times less risky than Central Retail. It trades about 0.1 of its potential returns per unit of risk. Central Retail is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,125 in Central Retail on August 30, 2024 and sell it today you would earn a total of 275.00 from holding Central Retail or generate 8.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Central Retail
Performance |
| Timeline |
| Okta Inc |
| Central Retail |
Okta and Central Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Central Retail
The main advantage of trading using opposite Okta and Central Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Central Retail 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 Central Retail will offset losses from the drop in Central Retail's long position.The idea behind Okta Inc and Central Retail 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.| Central Retail vs. SCG PACKAGING PCL NVDR | Central Retail vs. CK Power Public | Central Retail vs. Thai Metal Drum | Central Retail vs. Country Group Holdings |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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