Correlation Between Okta and Solarmax Technology
Can any of the company-specific risk be diversified away by investing in both Okta and Solarmax Technology 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 Solarmax Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Solarmax Technology Common, you can compare the effects of market volatilities on Okta and Solarmax Technology 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 Solarmax Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Solarmax Technology.
Diversification Opportunities for Okta and Solarmax Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Okta and Solarmax is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Solarmax Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solarmax Technology 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 Solarmax Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solarmax Technology has no effect on the direction of Okta i.e., Okta and Solarmax Technology go up and down completely randomly.
Pair Corralation between Okta and Solarmax Technology
Given the investment horizon of 90 days Okta is expected to generate 4.11 times less return on investment than Solarmax Technology. But when comparing it to its historical volatility, Okta Inc is 2.6 times less risky than Solarmax Technology. It trades about 0.13 of its potential returns per unit of risk. Solarmax Technology Common is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Solarmax Technology Common on August 27, 2024 and sell it today you would earn a total of 18.00 from holding Solarmax Technology Common or generate 18.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Solarmax Technology Common
Performance |
| Timeline |
| Okta Inc |
| Solarmax Technology |
Okta and Solarmax Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Solarmax Technology
The main advantage of trading using opposite Okta and Solarmax Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Solarmax Technology 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 Solarmax Technology will offset losses from the drop in Solarmax Technology's long position.The idea behind Okta Inc and Solarmax Technology Common 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.| Solarmax Technology vs. 1847 Holdings LLC | Solarmax Technology vs. Westport Fuel Systems | Solarmax Technology vs. Falcons Beyond Global, | Solarmax Technology vs. Brookfield Business Partners |
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 CEOs Directory module to screen CEOs from public companies around the world.
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