Correlation Between Palomar Holdings and Oklo

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

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

Diversification Opportunities for Palomar Holdings and Oklo

0.05

Correlation Coefficient

Palomar Holdings  Oklo

Significant diversification

The 3 months correlation between Palomar and Oklo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Palomar Holdings and Oklo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklo Inc and Palomar 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 Palomar Holdings 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 Palomar Holdings i.e., Palomar Holdings and Oklo go up and down completely randomly.

Pair Corralation between Palomar Holdings and Oklo

Given the investment horizon of 90 days Palomar Holdings is expected to generate 1.91 times less return on investment than Oklo. But when comparing it to its historical volatility, Palomar Holdings is 3.45 times less risky than Oklo. It trades about 0.17 of its potential returns per unit of risk. Oklo Inc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,404  in Oklo Inc on December 25, 2024 and sell it today you would earn a total of  687.00  from holding Oklo Inc or generate 28.58% return on investment over 90 days.

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

Palomar Holdings  vs.  Oklo Inc

Palomar Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Palomar Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating primary indicators, Palomar Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Oklo Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Oklo Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent essential indicators, Oklo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Palomar Holdings and Oklo

The main advantage of trading using opposite Palomar Holdings and Oklo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Palomar 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 Palomar Holdings 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..