Correlation Between Okta and Ghandhara Automobile
Can any of the company-specific risk be diversified away by investing in both Okta and Ghandhara Automobile 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 Ghandhara Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Ghandhara Automobile, you can compare the effects of market volatilities on Okta and Ghandhara Automobile 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 Ghandhara Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Ghandhara Automobile.
Diversification Opportunities for Okta and Ghandhara Automobile
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okta and Ghandhara is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Ghandhara Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ghandhara Automobile 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 Ghandhara Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ghandhara Automobile has no effect on the direction of Okta i.e., Okta and Ghandhara Automobile go up and down completely randomly.
Pair Corralation between Okta and Ghandhara Automobile
Given the investment horizon of 90 days Okta Inc is expected to generate 0.42 times more return on investment than Ghandhara Automobile. However, Okta Inc is 2.36 times less risky than Ghandhara Automobile. It trades about 0.06 of its potential returns per unit of risk. Ghandhara Automobile is currently generating about 0.02 per unit of risk. If you would invest 7,399 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 284.00 from holding Okta Inc or generate 3.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Ghandhara Automobile
Performance |
| Timeline |
| Okta Inc |
| Ghandhara Automobile |
Okta and Ghandhara Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Ghandhara Automobile
The main advantage of trading using opposite Okta and Ghandhara Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Ghandhara Automobile 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 Ghandhara Automobile will offset losses from the drop in Ghandhara Automobile's long position.The idea behind Okta Inc and Ghandhara Automobile 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.| Ghandhara Automobile vs. Habib Insurance | Ghandhara Automobile vs. Century Insurance | Ghandhara Automobile vs. Reliance Weaving Mills | Ghandhara Automobile vs. Media Times |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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