Correlation Between Okta and Appian Corp

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

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

Diversification Opportunities for Okta and Appian Corp

0.59

Correlation Coefficient

Okta  Appian Corp

Very weak diversification

The 3 months correlation between Okta and Appian is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Okta 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 Okta Inc are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Okta i.e., Okta and Appian Corp go up and down completely randomly.

Pair Corralation between Okta and Appian Corp

Given the investment horizon of 90 days Okta is expected to generate 1.3 times less return on investment than Appian Corp. But when comparing it to its historical volatility, Okta Inc is 1.43 times less risky than Appian Corp. It trades about 0.13 of its potential returns per unit of risk. Appian Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,287  in Appian Corp on September 13, 2024 and sell it today you would earn a total of  617.00  from holding Appian Corp or generate 18.77% return on investment over 90 days.

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

Okta Inc  vs.  Appian Corp

Okta Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Okta Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Okta sustained solid returns over the last few months and may actually be approaching a breakup point.

Appian Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appian Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Appian Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Okta and Appian Corp

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

The idea behind Okta Inc and Appian Corp 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.