Correlation Between Okta and Chocoladefabriken

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

By analyzing existing cross correlation between Okta Inc and Chocoladefabriken Lindt Sprngli, you can compare the effects of market volatilities on Okta and Chocoladefabriken 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 Chocoladefabriken. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Chocoladefabriken.

Diversification Opportunities for Okta and Chocoladefabriken

-0.64

Correlation Coefficient

Okta  Chocoladefabriken

Excellent diversification

The 3 months correlation between Okta and Chocoladefabriken is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Chocoladefabriken Lindt Sprngl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chocoladefabriken Lindt 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 Chocoladefabriken. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chocoladefabriken Lindt has no effect on the direction of Okta i.e., Okta and Chocoladefabriken go up and down completely randomly.

Pair Corralation between Okta and Chocoladefabriken

Given the investment horizon of 90 days Okta is expected to generate 2.24 times less return on investment than Chocoladefabriken. But when comparing it to its historical volatility, Okta Inc is 1.2 times less risky than Chocoladefabriken. It trades about 0.02 of its potential returns per unit of risk. Chocoladefabriken Lindt Sprngli is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,097  in Chocoladefabriken Lindt Sprngli on October 12, 2024 and sell it today you would earn a total of  17.00  from holding Chocoladefabriken Lindt Sprngli or generate 1.55% return on investment over 90 days.

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

Okta Inc  vs.  Chocoladefabriken Lindt Sprngl

Okta Inc

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Chocoladefabriken Lindt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chocoladefabriken Lindt Sprngli has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Okta and Chocoladefabriken

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

The idea behind Okta Inc and Chocoladefabriken Lindt Sprngli 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.