Correlation Between TOTVS SA and Okta

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

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

Diversification Opportunities for TOTVS SA and Okta

-0.38

Correlation Coefficient

TOTVS SA  Okta

Very good diversification

The 3 months correlation between TOTVS and Okta is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding TOTVS SA and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and TOTVS SA 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 TOTVS SA 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 TOTVS SA i.e., TOTVS SA and Okta go up and down completely randomly.

Pair Corralation between TOTVS SA and Okta

Assuming the 90 days trading horizon TOTVS SA is expected to generate 17.24 times less return on investment than Okta. But when comparing it to its historical volatility, TOTVS SA is 1.47 times less risky than Okta. It trades about 0.0 of its potential returns per unit of risk. Okta Inc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,739  in Okta Inc on October 10, 2024 and sell it today you would earn a total of  843.00  from holding Okta Inc or generate 48.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.39%
Values	Daily Returns

TOTVS SA  vs.  Okta Inc

TOTVS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOTVS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, TOTVS SA 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

11 of 100

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 somewhat uncertain forward-looking signals, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TOTVS SA and Okta

The main advantage of trading using opposite TOTVS SA and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOTVS SA 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 TOTVS SA 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.