Correlation Between NEO and OKB

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NEO 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 NEO and OKB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEO and OKB, you can compare the effects of market volatilities on NEO 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 NEO with a short position of OKB. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEO and OKB.

Diversification Opportunities for NEO and OKB

0.79
  Correlation Coefficient
 NEO
 OKB

Poor diversification

The 3 months correlation between NEO and OKB is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NEO and OKB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OKB and NEO 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 NEO 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 NEO i.e., NEO and OKB go up and down completely randomly.

Pair Corralation between NEO and OKB

Assuming the 90 days trading horizon NEO is expected to generate 1.09 times more return on investment than OKB. However, NEO is 1.09 times more volatile than OKB. It trades about 0.18 of its potential returns per unit of risk. OKB is currently generating about 0.19 per unit of risk. If you would invest  1,340  in NEO on December 29, 2023 and sell it today you would earn a total of  290.00  from holding NEO or generate 21.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

NEO  vs.  OKB

 Performance 
       Timeline  
NEO 

Risk-Adjusted Performance

5 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NEO are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NEO exhibited solid returns over the last few months and may actually be approaching a breakup point.
OKB 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in OKB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, OKB exhibited solid returns over the last few months and may actually be approaching a breakup point.

NEO and OKB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NEO and OKB

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

Other Complementary Tools

Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
FinTech Suite
Use AI to screen and filter profitable investment opportunities
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Aroon Oscillator
Analyze current equity momentum using Aroon Oscillator and other momentum ratios
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Latest Portfolios
Quick portfolio dashboard that showcases your latest portfolios