Correlation Between Aker ASA and Arendals Fossekompani
Can any of the company-specific risk be diversified away by investing in both Aker ASA and Arendals Fossekompani 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 ASA and Arendals Fossekompani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker ASA and Arendals Fossekompani ASA, you can compare the effects of market volatilities on Aker ASA and Arendals Fossekompani 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 ASA with a short position of Arendals Fossekompani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and Arendals Fossekompani.
Diversification Opportunities for Aker ASA and Arendals Fossekompani
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aker and Arendals is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Arendals Fossekompani ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arendals Fossekompani ASA and Aker ASA 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 ASA are associated (or correlated) with Arendals Fossekompani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arendals Fossekompani ASA has no effect on the direction of Aker ASA i.e., Aker ASA and Arendals Fossekompani go up and down completely randomly.
Pair Corralation between Aker ASA and Arendals Fossekompani
Assuming the 90 days trading horizon Aker ASA is expected to generate 0.68 times more return on investment than Arendals Fossekompani. However, Aker ASA is 1.47 times less risky than Arendals Fossekompani. It trades about -0.01 of its potential returns per unit of risk. Arendals Fossekompani ASA is currently generating about -0.01 per unit of risk. If you would invest 61,007 in Aker ASA on August 25, 2024 and sell it today you would lose (3,307) from holding Aker ASA or give up 5.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker ASA vs. Arendals Fossekompani ASA
Performance |
| Timeline |
| Aker ASA |
| Arendals Fossekompani ASA |
Aker ASA and Arendals Fossekompani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker ASA and Arendals Fossekompani
The main advantage of trading using opposite Aker ASA and Arendals Fossekompani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA position performs unexpectedly, Arendals Fossekompani 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 Arendals Fossekompani will offset losses from the drop in Arendals Fossekompani's long position.| Aker ASA vs. Storebrand ASA | Aker ASA vs. Aker Solutions ASA | Aker ASA vs. DnB ASA | Aker ASA vs. Orkla ASA |
| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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