Correlation Between Okta and Nagacorp
Can any of the company-specific risk be diversified away by investing in both Okta and Nagacorp 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 Nagacorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Nagacorp, you can compare the effects of market volatilities on Okta and Nagacorp 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 Nagacorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Nagacorp.
Diversification Opportunities for Okta and Nagacorp
Poor diversification
The 3 months correlation between Okta and Nagacorp is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Nagacorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nagacorp 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 Nagacorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nagacorp has no effect on the direction of Okta i.e., Okta and Nagacorp go up and down completely randomly.
Pair Corralation between Okta and Nagacorp
Given the investment horizon of 90 days Okta Inc is expected to generate 0.52 times more return on investment than Nagacorp. However, Okta Inc is 1.92 times less risky than Nagacorp. It trades about 0.04 of its potential returns per unit of risk. Nagacorp is currently generating about -0.03 per unit of risk. If you would invest 7,315 in Okta Inc on January 13, 2025 and sell it today you would earn a total of 2,867 from holding Okta Inc or generate 39.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 44.56% |
| Values | Daily Returns |
Okta Inc vs. Nagacorp
Performance |
| Timeline |
| Okta Inc |
| Nagacorp |
Okta and Nagacorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Nagacorp
The main advantage of trading using opposite Okta and Nagacorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Nagacorp 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 Nagacorp will offset losses from the drop in Nagacorp's long position.The idea behind Okta Inc and Nagacorp 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.| Nagacorp vs. Banyan Tree Holdings | Nagacorp vs. Wynn Macau | Nagacorp vs. MGM China Holdings | Nagacorp vs. Table Trac |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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