Correlation Between Okta and Softronic
Can any of the company-specific risk be diversified away by investing in both Okta and Softronic 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 Softronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Softronic AB, you can compare the effects of market volatilities on Okta and Softronic 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 Softronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Softronic.
Diversification Opportunities for Okta and Softronic
Significant diversification
The 3 months correlation between Okta and Softronic is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Softronic AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Softronic 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 Softronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Softronic AB has no effect on the direction of Okta i.e., Okta and Softronic go up and down completely randomly.
Pair Corralation between Okta and Softronic
Given the investment horizon of 90 days Okta Inc is expected to generate 1.56 times more return on investment than Softronic. However, Okta is 1.56 times more volatile than Softronic AB. It trades about 0.02 of its potential returns per unit of risk. Softronic AB is currently generating about 0.03 per unit of risk. If you would invest 6,803 in Okta Inc on August 28, 2024 and sell it today you would earn a total of 847.00 from holding Okta Inc or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Okta Inc vs. Softronic AB
Performance |
| Timeline |
| Okta Inc |
| Softronic AB |
Okta and Softronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Softronic
The main advantage of trading using opposite Okta and Softronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Softronic 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 Softronic will offset losses from the drop in Softronic's long position.The idea behind Okta Inc and Softronic 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.| Softronic vs. eWork Group AB | Softronic vs. Novotek AB | Softronic vs. Prevas AB | Softronic vs. Proact IT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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