Correlation Between Okta and SBI Life

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Can any of the company-specific risk be diversified away by investing in both Okta and SBI Life 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 SBI Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and SBI Life Insurance, you can compare the effects of market volatilities on Okta and SBI Life 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 SBI Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and SBI Life.

Diversification Opportunities for Okta and SBI Life

0.02
  Correlation Coefficient

Significant diversification

The 3 months correlation between Okta and SBI is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and SBI Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Life Insurance 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 SBI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Life Insurance has no effect on the direction of Okta i.e., Okta and SBI Life go up and down completely randomly.

Pair Corralation between Okta and SBI Life

Given the investment horizon of 90 days Okta Inc is expected to generate 1.8 times more return on investment than SBI Life. However, Okta is 1.8 times more volatile than SBI Life Insurance. It trades about 0.02 of its potential returns per unit of risk. SBI Life Insurance is currently generating about 0.02 per unit of risk. If you would invest  7,077  in Okta Inc on August 25, 2024 and sell it today you would earn a total of  580.00  from holding Okta Inc or generate 8.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy97.6%
ValuesDaily Returns

Okta Inc  vs.  SBI Life Insurance

 Performance 
       Timeline  
Okta Inc 

Risk-Adjusted Performance

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Over the last 90 days Okta Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.
SBI Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SBI Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Okta and SBI Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Okta and SBI Life

The main advantage of trading using opposite Okta and SBI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, SBI Life 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 SBI Life will offset losses from the drop in SBI Life's long position.
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The idea behind Okta Inc and SBI Life Insurance 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.
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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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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