Correlation Between Okta and Pakistan Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Okta and Pakistan Telecommunicatio 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 Pakistan Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Pakistan Telecommunication, you can compare the effects of market volatilities on Okta and Pakistan Telecommunicatio 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 Pakistan Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Pakistan Telecommunicatio.
Diversification Opportunities for Okta and Pakistan Telecommunicatio
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Okta and Pakistan is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Pakistan Telecommunication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pakistan Telecommunicatio 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 Pakistan Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pakistan Telecommunicatio has no effect on the direction of Okta i.e., Okta and Pakistan Telecommunicatio go up and down completely randomly.
Pair Corralation between Okta and Pakistan Telecommunicatio
Given the investment horizon of 90 days Okta is expected to generate 3.13 times less return on investment than Pakistan Telecommunicatio. But when comparing it to its historical volatility, Okta Inc is 1.95 times less risky than Pakistan Telecommunicatio. It trades about 0.13 of its potential returns per unit of risk. Pakistan Telecommunication is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,558 in Pakistan Telecommunication on August 28, 2024 and sell it today you would earn a total of 223.00 from holding Pakistan Telecommunication or generate 14.31% 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. Pakistan Telecommunication
Performance |
| Timeline |
| Okta Inc |
| Pakistan Telecommunicatio |
Okta and Pakistan Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Pakistan Telecommunicatio
The main advantage of trading using opposite Okta and Pakistan Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Pakistan Telecommunicatio 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 Pakistan Telecommunicatio will offset losses from the drop in Pakistan Telecommunicatio's long position.The idea behind Okta Inc and Pakistan Telecommunication 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.| Pakistan Telecommunicatio vs. Masood Textile Mills | Pakistan Telecommunicatio vs. Fauji Foods | Pakistan Telecommunicatio vs. KSB Pumps | Pakistan Telecommunicatio vs. Mari Petroleum |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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