Correlation Between Akamai Technologies and Okta

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Can any of the company-specific risk be diversified away by investing in both Akamai Technologies 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 Akamai Technologies and Okta into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Akamai Technologies and Okta Inc, you can compare the effects of market volatilities on Akamai Technologies 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 Akamai Technologies with a short position of Okta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Akamai Technologies and Okta.

Diversification Opportunities for Akamai Technologies and Okta

-0.6
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Akamai and Okta is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Akamai Technologies and Okta Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Okta Inc and Akamai Technologies 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 Akamai Technologies 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 Akamai Technologies i.e., Akamai Technologies and Okta go up and down completely randomly.

Pair Corralation between Akamai Technologies and Okta

Given the investment horizon of 90 days Akamai Technologies is expected to under-perform the Okta. But the stock apears to be less risky and, when comparing its historical volatility, Akamai Technologies is 2.46 times less risky than Okta. The stock trades about 0.0 of its potential returns per unit of risk. The Okta Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  14,493  in Okta Inc on December 30, 2023 and sell it today you would lose (4,031) from holding Okta Inc or give up 27.81% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Akamai Technologies  vs.  Okta Inc

 Performance 
       Timeline  
Akamai Technologies 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Akamai Technologies 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Okta Inc 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Akamai Technologies and Okta Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Akamai Technologies and Okta

The main advantage of trading using opposite Akamai Technologies and Okta positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Akamai Technologies 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 Akamai Technologies 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.
Check out your portfolio center.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

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