Correlation Between Aker Carbon and North Energy
Can any of the company-specific risk be diversified away by investing in both Aker Carbon and North Energy 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 Aker Carbon and North Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Carbon Capture and North Energy ASA, you can compare the effects of market volatilities on Aker Carbon and North Energy 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 Aker Carbon with a short position of North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and North Energy.
Diversification Opportunities for Aker Carbon and North Energy
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and North is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Aker Carbon i.e., Aker Carbon and North Energy go up and down completely randomly.
Pair Corralation between Aker Carbon and North Energy
Assuming the 90 days trading horizon Aker Carbon Capture is expected to under-perform the North Energy. In addition to that, Aker Carbon is 1.06 times more volatile than North Energy ASA. It trades about -0.08 of its total potential returns per unit of risk. North Energy ASA is currently generating about 0.06 per unit of volatility. If you would invest 234.00 in North Energy ASA on August 29, 2024 and sell it today you would earn a total of 36.00 from holding North Energy ASA or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Carbon Capture vs. North Energy ASA
Performance |
| Timeline |
| Aker Carbon Capture |
| North Energy ASA |
Aker Carbon and North Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Carbon and North Energy
The main advantage of trading using opposite Aker Carbon and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.The idea behind Aker Carbon Capture and North Energy ASA 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.| North Energy vs. Napatech AS | North Energy vs. Polaris Media | North Energy vs. Goodtech | North Energy vs. Grieg Seafood ASA |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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