Correlation Between Okta and KBC Groep
Can any of the company-specific risk be diversified away by investing in both Okta and KBC Groep 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 KBC Groep into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and KBC Groep NV, you can compare the effects of market volatilities on Okta and KBC Groep 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 KBC Groep. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and KBC Groep.
Diversification Opportunities for Okta and KBC Groep
Modest diversification
The 3 months correlation between Okta and KBC is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and KBC Groep NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KBC Groep NV 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 KBC Groep. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KBC Groep NV has no effect on the direction of Okta i.e., Okta and KBC Groep go up and down completely randomly.
Pair Corralation between Okta and KBC Groep
Given the investment horizon of 90 days Okta Inc is expected to generate 1.23 times more return on investment than KBC Groep. However, Okta is 1.23 times more volatile than KBC Groep NV. It trades about 0.12 of its potential returns per unit of risk. KBC Groep NV is currently generating about 0.08 per unit of risk. If you would invest 7,216 in Okta Inc on August 24, 2024 and sell it today you would earn a total of 329.00 from holding Okta Inc or generate 4.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Okta Inc vs. KBC Groep NV
Performance |
| Timeline |
| Okta Inc |
| KBC Groep NV |
Okta and KBC Groep Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and KBC Groep
The main advantage of trading using opposite Okta and KBC Groep positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, KBC Groep 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 KBC Groep will offset losses from the drop in KBC Groep's long position.The idea behind Okta Inc and KBC Groep NV 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.| KBC Groep vs. DBS Group Holdings | KBC Groep vs. United Overseas Bank | KBC Groep vs. Overseas Chinese Banking | KBC Groep vs. China Minsh |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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