Correlation Between Okta and King Resources
Can any of the company-specific risk be diversified away by investing in both Okta and King Resources 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 King Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and King Resources, you can compare the effects of market volatilities on Okta and King Resources 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 King Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and King Resources.
Diversification Opportunities for Okta and King Resources
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and King is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and King Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Resources 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 King Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Resources has no effect on the direction of Okta i.e., Okta and King Resources go up and down completely randomly.
Pair Corralation between Okta and King Resources
Given the investment horizon of 90 days Okta is expected to generate 16.26 times less return on investment than King Resources. But when comparing it to its historical volatility, Okta Inc is 19.53 times less risky than King Resources. It trades about 0.16 of its potential returns per unit of risk. King Resources is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 0.02 in King Resources on August 26, 2024 and sell it today you would earn a total of 0.00 from holding King Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. King Resources
Performance |
| Timeline |
| Okta Inc |
| King Resources |
Okta and King Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and King Resources
The main advantage of trading using opposite Okta and King Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, King Resources 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 King Resources will offset losses from the drop in King Resources' long position.The idea behind Okta Inc and King Resources 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.| King Resources vs. FREYR Battery SA | King Resources vs. nVent Electric PLC | King Resources vs. Hubbell | King Resources vs. Advanced Energy Industries |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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