Correlation Between Okta and Sdiptech
Can any of the company-specific risk be diversified away by investing in both Okta and Sdiptech 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 Sdiptech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Sdiptech AB, you can compare the effects of market volatilities on Okta and Sdiptech 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 Sdiptech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Sdiptech.
Diversification Opportunities for Okta and Sdiptech
Weak diversification
The 3 months correlation between Okta and Sdiptech is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Sdiptech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sdiptech AB 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 Sdiptech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sdiptech AB has no effect on the direction of Okta i.e., Okta and Sdiptech go up and down completely randomly.
Pair Corralation between Okta and Sdiptech
Given the investment horizon of 90 days Okta Inc is expected to generate 1.43 times more return on investment than Sdiptech. However, Okta is 1.43 times more volatile than Sdiptech AB. It trades about -0.12 of its potential returns per unit of risk. Sdiptech AB is currently generating about -0.26 per unit of risk. If you would invest 9,654 in Okta Inc on August 28, 2024 and sell it today you would lose (2,004) from holding Okta Inc or give up 20.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Okta Inc vs. Sdiptech AB
Performance |
| Timeline |
| Okta Inc |
| Sdiptech AB |
Okta and Sdiptech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Sdiptech
The main advantage of trading using opposite Okta and Sdiptech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Sdiptech 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 Sdiptech will offset losses from the drop in Sdiptech's long position.The idea behind Okta Inc and Sdiptech AB 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.| Sdiptech vs. AB Sagax | Sdiptech vs. ALM Equity AB | Sdiptech vs. KABE Group AB | Sdiptech vs. IAR Systems Group |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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