Correlation Between Okta and Matthews China
Can any of the company-specific risk be diversified away by investing in both Okta and Matthews China 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 Matthews China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Matthews China Dividend, you can compare the effects of market volatilities on Okta and Matthews China 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 Matthews China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Matthews China.
Diversification Opportunities for Okta and Matthews China
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Okta and Matthews is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Matthews China Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthews China Dividend 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 Matthews China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthews China Dividend has no effect on the direction of Okta i.e., Okta and Matthews China go up and down completely randomly.
Pair Corralation between Okta and Matthews China
Given the investment horizon of 90 days Okta Inc is expected to generate 2.11 times more return on investment than Matthews China. However, Okta is 2.11 times more volatile than Matthews China Dividend. It trades about 0.03 of its potential returns per unit of risk. Matthews China Dividend is currently generating about -0.01 per unit of risk. If you would invest 6,442 in Okta Inc on August 30, 2024 and sell it today you would earn a total of 1,200 from holding Okta Inc or generate 18.63% 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. Matthews China Dividend
Performance |
| Timeline |
| Okta Inc |
| Matthews China Dividend |
Okta and Matthews China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Matthews China
The main advantage of trading using opposite Okta and Matthews China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Matthews China 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 Matthews China will offset losses from the drop in Matthews China's long position.The idea behind Okta Inc and Matthews China Dividend 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.| Matthews China vs. Matthews China Dividend | Matthews China vs. Matthews China Fund | Matthews China vs. Matthews China Small | Matthews China vs. Aquagold International |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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