Correlation Between Okta and S A P
Can any of the company-specific risk be diversified away by investing in both Okta and S A P 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 S A P into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and SAP SE, you can compare the effects of market volatilities on Okta and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and S A P.
Diversification Opportunities for Okta and S A P
Very good diversification
The 3 months correlation between Okta and SAP is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Okta i.e., Okta and S A P go up and down completely randomly.
Pair Corralation between Okta and S A P
Given the investment horizon of 90 days Okta is expected to generate 5.85 times less return on investment than S A P. In addition to that, Okta is 1.3 times more volatile than SAP SE. It trades about 0.02 of its total potential returns per unit of risk. SAP SE is currently generating about 0.16 per unit of volatility. If you would invest 20,655 in SAP SE on August 25, 2024 and sell it today you would earn a total of 1,960 from holding SAP SE or generate 9.49% 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. SAP SE
Performance |
| Timeline |
| Okta Inc |
| SAP SE |
Okta and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and S A P
The main advantage of trading using opposite Okta and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.The idea behind Okta Inc and SAP SE 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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