Correlation Between Okta and Mendus AB

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Can any of the company-specific risk be diversified away by investing in both Okta and Mendus AB 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 Mendus AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Mendus AB, you can compare the effects of market volatilities on Okta and Mendus AB 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 Mendus AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Mendus AB.

Diversification Opportunities for Okta and Mendus AB

-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Okta and Mendus is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Mendus AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mendus 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 Mendus AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mendus AB has no effect on the direction of Okta i.e., Okta and Mendus AB go up and down completely randomly.

Pair Corralation between Okta and Mendus AB

Given the investment horizon of 90 days Okta Inc is expected to generate 0.48 times more return on investment than Mendus AB. However, Okta Inc is 2.07 times less risky than Mendus AB. It trades about 0.03 of its potential returns per unit of risk. Mendus AB is currently generating about -0.03 per unit of risk. If you would invest  6,194  in Okta Inc on August 25, 2024 and sell it today you would earn a total of  1,463  from holding Okta Inc or generate 23.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.6%
ValuesDaily Returns

Okta Inc  vs.  Mendus AB

 Performance 
       Timeline  
Okta Inc 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Okta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
Mendus AB 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Mendus AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Mendus AB may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Okta and Mendus AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Okta and Mendus AB

The main advantage of trading using opposite Okta and Mendus AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Mendus AB 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 Mendus AB will offset losses from the drop in Mendus AB's long position.
The idea behind Okta Inc and Mendus 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.
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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