Correlation Between SOLVE and OKB
Can any of the company-specific risk be diversified away by investing in both SOLVE and OKB 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 SOLVE and OKB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLVE and OKB, you can compare the effects of market volatilities on SOLVE and OKB 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 SOLVE with a short position of OKB. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLVE and OKB.
Diversification Opportunities for SOLVE and OKB
Poor diversification
The 3 months correlation between SOLVE and OKB is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding SOLVE and OKB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKB and SOLVE 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 SOLVE are associated (or correlated) with OKB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OKB has no effect on the direction of SOLVE i.e., SOLVE and OKB go up and down completely randomly.
Pair Corralation between SOLVE and OKB
Assuming the 90 days trading horizon SOLVE is expected to under-perform the OKB. In addition to that, SOLVE is 1.22 times more volatile than OKB. It trades about -0.17 of its total potential returns per unit of risk. OKB is currently generating about -0.05 per unit of volatility. If you would invest 5,937 in OKB on January 20, 2024 and sell it today you would lose (407.00) from holding OKB or give up 6.86% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
SOLVE vs. OKB
Performance |
Timeline |
SOLVE |
OKB |
SOLVE and OKB Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SOLVE and OKB
The main advantage of trading using opposite SOLVE and OKB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLVE position performs unexpectedly, OKB 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 OKB will offset losses from the drop in OKB's long position.The idea behind SOLVE and OKB 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |