Correlation Between Okta and Oceania Healthcare
Can any of the company-specific risk be diversified away by investing in both Okta and Oceania Healthcare 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 Oceania Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Oceania Healthcare, you can compare the effects of market volatilities on Okta and Oceania Healthcare 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 Oceania Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Oceania Healthcare.
Diversification Opportunities for Okta and Oceania Healthcare
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Okta and Oceania is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Oceania Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceania Healthcare 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 Oceania Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceania Healthcare has no effect on the direction of Okta i.e., Okta and Oceania Healthcare go up and down completely randomly.
Pair Corralation between Okta and Oceania Healthcare
Given the investment horizon of 90 days Okta Inc is expected to under-perform the Oceania Healthcare. But the stock apears to be less risky and, when comparing its historical volatility, Okta Inc is 1.29 times less risky than Oceania Healthcare. The stock trades about -0.17 of its potential returns per unit of risk. The Oceania Healthcare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 55.00 in Oceania Healthcare on January 15, 2025 and sell it today you would earn a total of 1.00 from holding Oceania Healthcare or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Okta Inc vs. Oceania Healthcare
Performance |
| Timeline |
| Okta Inc |
| Oceania Healthcare |
Okta and Oceania Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Oceania Healthcare
The main advantage of trading using opposite Okta and Oceania Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Oceania Healthcare 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 Oceania Healthcare will offset losses from the drop in Oceania Healthcare's long position.The idea behind Okta Inc and Oceania Healthcare 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.| Oceania Healthcare vs. Woolworths | Oceania Healthcare vs. Wesfarmers | Oceania Healthcare vs. Coles Group | Oceania Healthcare vs. Ramsay Health Care |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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