Correlation Between Okta and Eratex Djaja
Can any of the company-specific risk be diversified away by investing in both Okta and Eratex Djaja 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 Eratex Djaja into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Eratex Djaja Tbk, you can compare the effects of market volatilities on Okta and Eratex Djaja 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 Eratex Djaja. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Eratex Djaja.
Diversification Opportunities for Okta and Eratex Djaja
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Eratex is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Eratex Djaja Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eratex Djaja Tbk 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 Eratex Djaja. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eratex Djaja Tbk has no effect on the direction of Okta i.e., Okta and Eratex Djaja go up and down completely randomly.
Pair Corralation between Okta and Eratex Djaja
Given the investment horizon of 90 days Okta Inc is expected to generate 0.52 times more return on investment than Eratex Djaja. However, Okta Inc is 1.93 times less risky than Eratex Djaja. It trades about 0.03 of its potential returns per unit of risk. Eratex Djaja Tbk is currently generating about 0.0 per unit of risk. If you would invest 6,382 in Okta Inc on August 29, 2024 and sell it today you would earn a total of 1,301 from holding Okta Inc or generate 20.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.77% |
| Values | Daily Returns |
Okta Inc vs. Eratex Djaja Tbk
Performance |
| Timeline |
| Okta Inc |
| Eratex Djaja Tbk |
Okta and Eratex Djaja Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Eratex Djaja
The main advantage of trading using opposite Okta and Eratex Djaja positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Eratex Djaja 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 Eratex Djaja will offset losses from the drop in Eratex Djaja's long position.The idea behind Okta Inc and Eratex Djaja Tbk 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.| Eratex Djaja vs. Ever Shine Textile | Eratex Djaja vs. PT Century Textile | Eratex Djaja vs. Argo Pantes Tbk | Eratex Djaja vs. Primarindo Asia Infrastructure |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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