Correlation Between Okta and Star Petroleum
Can any of the company-specific risk be diversified away by investing in both Okta and Star Petroleum 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 Star Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Star Petroleum Refining, you can compare the effects of market volatilities on Okta and Star Petroleum 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 Star Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Star Petroleum.
Diversification Opportunities for Okta and Star Petroleum
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Okta and Star is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Star Petroleum Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Petroleum Refining 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 Star Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Petroleum Refining has no effect on the direction of Okta i.e., Okta and Star Petroleum go up and down completely randomly.
Pair Corralation between Okta and Star Petroleum
Given the investment horizon of 90 days Okta Inc is expected to generate 0.68 times more return on investment than Star Petroleum. However, Okta Inc is 1.46 times less risky than Star Petroleum. It trades about 0.19 of its potential returns per unit of risk. Star Petroleum Refining is currently generating about 0.07 per unit of risk. If you would invest 7,240 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 516.00 from holding Okta Inc or generate 7.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Star Petroleum Refining
Performance |
| Timeline |
| Okta Inc |
| Star Petroleum Refining |
Okta and Star Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Star Petroleum
The main advantage of trading using opposite Okta and Star Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Star Petroleum 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 Star Petroleum will offset losses from the drop in Star Petroleum's long position.The idea behind Okta Inc and Star Petroleum Refining 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.| Star Petroleum vs. Sawang Export Public | Star Petroleum vs. Quality Houses Hotel | Star Petroleum vs. Grande Hospitality Real | Star Petroleum vs. City Steel Public |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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