Correlation Between PULSION Medical and Okta

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

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

Diversification Opportunities for PULSION Medical and Okta

0.5

Correlation Coefficient

PULSION Medical  Okta

Very weak diversification

The 3 months correlation between PULSION and Okta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PULSION Medical Systems and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and PULSION Medical 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 PULSION Medical Systems are associated (or correlated) with Okta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Okta Inc has no effect on the direction of PULSION Medical i.e., PULSION Medical and Okta go up and down completely randomly.

Pair Corralation between PULSION Medical and Okta

Assuming the 90 days trading horizon PULSION Medical is expected to generate 46.04 times less return on investment than Okta. But when comparing it to its historical volatility, PULSION Medical Systems is 7.54 times less risky than Okta. It trades about 0.02 of its potential returns per unit of risk. Okta Inc is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  7,882  in Okta Inc on December 20, 2024 and sell it today you would earn a total of  2,528  from holding Okta Inc or generate 32.07% return on investment over 90 days.

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

PULSION Medical Systems  vs.  Okta Inc

PULSION Medical Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PULSION Medical Systems are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PULSION Medical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Okta Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Okta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PULSION Medical and Okta

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

The idea behind PULSION Medical Systems and Okta 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.