Correlation Between True USD and OKB

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

Diversification Opportunities for True USD and OKB

0.6
  Correlation Coefficient

Poor diversification

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

Pair Corralation between True USD and OKB

Assuming the 90 days trading horizon True USD is expected to generate 18.93 times less return on investment than OKB. But when comparing it to its historical volatility, True USD is 4.68 times less risky than OKB. It trades about 0.03 of its potential returns per unit of risk. OKB is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  5,278  in OKB on December 29, 2023 and sell it today you would earn a total of  1,070  from holding OKB or generate 20.27% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

True USD  vs.  OKB

 Performance 
       Timeline  
True USD 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days True USD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, True USD is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
OKB 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
OK
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.

True USD and OKB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with True USD and OKB

The main advantage of trading using opposite True USD and OKB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if True USD 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 True USD 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.

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