Correlation Between Okta and K2 Gold
Can any of the company-specific risk be diversified away by investing in both Okta and K2 Gold 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 K2 Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and K2 Gold, you can compare the effects of market volatilities on Okta and K2 Gold 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 K2 Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and K2 Gold.
Diversification Opportunities for Okta and K2 Gold
Good diversification
The 3 months correlation between Okta and KTO is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and K2 Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Gold 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 K2 Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Gold has no effect on the direction of Okta i.e., Okta and K2 Gold go up and down completely randomly.
Pair Corralation between Okta and K2 Gold
Given the investment horizon of 90 days Okta is expected to generate 4.18 times less return on investment than K2 Gold. But when comparing it to its historical volatility, Okta Inc is 3.58 times less risky than K2 Gold. It trades about 0.13 of its potential returns per unit of risk. K2 Gold is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 12.00 in K2 Gold on August 27, 2024 and sell it today you would earn a total of 2.00 from holding K2 Gold or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. K2 Gold
Performance |
| Timeline |
| Okta Inc |
| K2 Gold |
Okta and K2 Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and K2 Gold
The main advantage of trading using opposite Okta and K2 Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, K2 Gold 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 K2 Gold will offset losses from the drop in K2 Gold's long position.The idea behind Okta Inc and K2 Gold 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |