Correlation Between Aker BP and Akastor ASA
Can any of the company-specific risk be diversified away by investing in both Aker BP and Akastor ASA 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 BP and Akastor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker BP ASA and Akastor ASA, you can compare the effects of market volatilities on Aker BP and Akastor ASA 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 BP with a short position of Akastor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Akastor ASA.
Diversification Opportunities for Aker BP and Akastor ASA
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aker and Akastor is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Akastor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akastor ASA and Aker BP 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 BP ASA are associated (or correlated) with Akastor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akastor ASA has no effect on the direction of Aker BP i.e., Aker BP and Akastor ASA go up and down completely randomly.
Pair Corralation between Aker BP and Akastor ASA
Assuming the 90 days trading horizon Aker BP ASA is expected to under-perform the Akastor ASA. But the stock apears to be less risky and, when comparing its historical volatility, Aker BP ASA is 1.19 times less risky than Akastor ASA. The stock trades about -0.05 of its potential returns per unit of risk. The Akastor ASA is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,360 in Akastor ASA on September 3, 2024 and sell it today you would lose (94.00) from holding Akastor ASA or give up 6.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. Akastor ASA
Performance |
| Timeline |
| Aker BP ASA |
| Akastor ASA |
Aker BP and Akastor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Akastor ASA
The main advantage of trading using opposite Aker BP and Akastor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, Akastor ASA 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 Akastor ASA will offset losses from the drop in Akastor ASA's long position.The idea behind Aker BP ASA and Akastor 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.| Akastor ASA vs. Aker ASA | Akastor ASA vs. Subsea 7 SA | Akastor ASA vs. Aker Solutions ASA | Akastor ASA vs. TGS NOPEC Geophysical |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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