Correlation Between Okta and China Finance
Can any of the company-specific risk be diversified away by investing in both Okta and China Finance 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 China Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and China Finance Online, you can compare the effects of market volatilities on Okta and China Finance 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 China Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and China Finance.
Diversification Opportunities for Okta and China Finance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Okta and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and China Finance Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Finance Online 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 China Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Finance Online has no effect on the direction of Okta i.e., Okta and China Finance go up and down completely randomly.
Pair Corralation between Okta and China Finance
Given the investment horizon of 90 days Okta is expected to generate 40.25 times less return on investment than China Finance. But when comparing it to its historical volatility, Okta Inc is 23.35 times less risky than China Finance. It trades about 0.03 of its potential returns per unit of risk. China Finance Online is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.01 in China Finance Online on August 26, 2024 and sell it today you would earn a total of 0.00 from holding China Finance Online or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. China Finance Online
Performance |
| Timeline |
| Okta Inc |
| China Finance Online |
Okta and China Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and China Finance
The main advantage of trading using opposite Okta and China Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, China Finance 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 China Finance will offset losses from the drop in China Finance's long position.The idea behind Okta Inc and China Finance Online 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.| China Finance vs. Morgan Stanley | China Finance vs. Goldman Sachs Group | China Finance vs. Charles Schwab Corp | China Finance vs. Interactive Brokers Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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