Correlation Between Aker BP and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Aker BP and SalMar 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 SalMar 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 SalMar ASA, you can compare the effects of market volatilities on Aker BP and SalMar 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and SalMar ASA.
Diversification Opportunities for Aker BP and SalMar ASA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aker and SalMar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Aker BP i.e., Aker BP and SalMar ASA go up and down completely randomly.
Pair Corralation between Aker BP and SalMar ASA
Assuming the 90 days trading horizon Aker BP ASA is expected to under-perform the SalMar ASA. In addition to that, Aker BP is 1.16 times more volatile than SalMar ASA. It trades about -0.08 of its total potential returns per unit of risk. SalMar ASA is currently generating about 0.04 per unit of volatility. If you would invest 54,950 in SalMar ASA on August 29, 2024 and sell it today you would earn a total of 2,050 from holding SalMar ASA or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. SalMar ASA
Performance |
| Timeline |
| Aker BP ASA |
| SalMar ASA |
Aker BP and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and SalMar ASA
The main advantage of trading using opposite Aker BP and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, SalMar 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 SalMar ASA will offset losses from the drop in SalMar ASA's long position.The idea behind Aker BP ASA and SalMar 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.| SalMar ASA vs. Mowi ASA | SalMar ASA vs. Lery Seafood Group | SalMar ASA vs. Pf Bakkafrost | SalMar ASA 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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