Correlation Between Aker BP and Spir Group
Can any of the company-specific risk be diversified away by investing in both Aker BP and Spir Group 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 Spir Group 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 Spir Group ASA, you can compare the effects of market volatilities on Aker BP and Spir Group 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 Spir Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Spir Group.
Diversification Opportunities for Aker BP and Spir Group
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aker and Spir is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Spir Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spir Group 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 Spir Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spir Group ASA has no effect on the direction of Aker BP i.e., Aker BP and Spir Group go up and down completely randomly.
Pair Corralation between Aker BP and Spir Group
Assuming the 90 days trading horizon Aker BP ASA is expected to generate 0.71 times more return on investment than Spir Group. However, Aker BP ASA is 1.4 times less risky than Spir Group. It trades about 0.07 of its potential returns per unit of risk. Spir Group ASA is currently generating about 0.03 per unit of risk. If you would invest 23,290 in Aker BP ASA on November 2, 2024 and sell it today you would earn a total of 430.00 from holding Aker BP ASA or generate 1.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. Spir Group ASA
Performance |
| Timeline |
| Aker BP ASA |
| Spir Group ASA |
Aker BP and Spir Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Spir Group
The main advantage of trading using opposite Aker BP and Spir Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, Spir Group 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 Spir Group will offset losses from the drop in Spir Group's long position.The idea behind Aker BP ASA and Spir Group 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.| Spir Group vs. Bien Sparebank ASA | Spir Group vs. Morrow Bank ASA | Spir Group vs. Nordhealth AS | Spir Group vs. Aasen Sparebank |
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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