Correlation Between Aker Solutions and Aker BP
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and Aker BP 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 Solutions and Aker BP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Solutions ASA and Aker BP ASA, you can compare the effects of market volatilities on Aker Solutions and Aker BP 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 Solutions with a short position of Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and Aker BP.
Diversification Opportunities for Aker Solutions and Aker BP
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aker and Aker is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP ASA and Aker Solutions 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 Solutions ASA are associated (or correlated) with Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of Aker Solutions i.e., Aker Solutions and Aker BP go up and down completely randomly.
Pair Corralation between Aker Solutions and Aker BP
Assuming the 90 days trading horizon Aker Solutions ASA is expected to generate 2.2 times more return on investment than Aker BP. However, Aker Solutions is 2.2 times more volatile than Aker BP ASA. It trades about 0.19 of its potential returns per unit of risk. Aker BP ASA is currently generating about 0.11 per unit of risk. If you would invest 4,356 in Aker Solutions ASA on August 25, 2024 and sell it today you would earn a total of 674.00 from holding Aker Solutions ASA or generate 15.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aker Solutions ASA vs. Aker BP ASA
Performance |
| Timeline |
| Aker Solutions ASA |
| Aker BP ASA |
Aker Solutions and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and Aker BP
The main advantage of trading using opposite Aker Solutions and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, Aker BP 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 Aker BP will offset losses from the drop in Aker BP's long position.The idea behind Aker Solutions ASA and Aker BP 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.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |