Correlation Between Arm Holdings and Oklo

Can any of the company-specific risk be diversified away by investing in both Arm Holdings and Oklo 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 Arm Holdings and Oklo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Arm Holdings plc and Oklo Inc, you can compare the effects of market volatilities on Arm Holdings and Oklo 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 Arm Holdings with a short position of Oklo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arm Holdings and Oklo.

Diversification Opportunities for Arm Holdings and Oklo

0.65

Correlation Coefficient

Arm Holdings  Oklo

Poor diversification

The 3 months correlation between Arm and Oklo is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Arm Holdings plc and Oklo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklo Inc and Arm Holdings 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 Arm Holdings plc are associated (or correlated) with Oklo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklo Inc has no effect on the direction of Arm Holdings i.e., Arm Holdings and Oklo go up and down completely randomly.

Pair Corralation between Arm Holdings and Oklo

Considering the 90-day investment horizon Arm Holdings plc is expected to under-perform the Oklo. But the stock apears to be less risky and, when comparing its historical volatility, Arm Holdings plc is 2.09 times less risky than Oklo. The stock trades about -0.05 of its potential returns per unit of risk. The Oklo Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,848  in Oklo Inc on December 16, 2024 and sell it today you would earn a total of  924.00  from holding Oklo Inc or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Arm Holdings plc  vs.  Oklo Inc

Arm Holdings plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arm Holdings plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Oklo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oklo Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Oklo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Arm Holdings and Oklo

The main advantage of trading using opposite Arm Holdings and Oklo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arm Holdings position performs unexpectedly, Oklo 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 Oklo will offset losses from the drop in Oklo's long position.

The idea behind Arm Holdings plc and Oklo Inc 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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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.