Correlation Between Aker Solutions and Eqva ASA
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and Eqva 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 Solutions and Eqva ASA 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 Eqva ASA, you can compare the effects of market volatilities on Aker Solutions and Eqva 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 Solutions with a short position of Eqva ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and Eqva ASA.
Diversification Opportunities for Aker Solutions and Eqva ASA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aker and Eqva is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Eqva ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eqva 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 Eqva ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eqva ASA has no effect on the direction of Aker Solutions i.e., Aker Solutions and Eqva ASA go up and down completely randomly.
Pair Corralation between Aker Solutions and Eqva ASA
Assuming the 90 days trading horizon Aker Solutions is expected to generate 2.68 times less return on investment than Eqva ASA. But when comparing it to its historical volatility, Aker Solutions ASA is 1.45 times less risky than Eqva ASA. It trades about 0.07 of its potential returns per unit of risk. Eqva ASA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 445.00 in Eqva ASA on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Eqva ASA or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Solutions ASA vs. Eqva ASA
Performance |
| Timeline |
| Aker Solutions ASA |
| Eqva ASA |
Aker Solutions and Eqva ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and Eqva ASA
The main advantage of trading using opposite Aker Solutions and Eqva ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, Eqva 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 Eqva ASA will offset losses from the drop in Eqva ASA's long position.| Aker Solutions vs. Aker ASA | Aker Solutions vs. Subsea 7 SA | Aker Solutions vs. TGS NOPEC Geophysical | Aker Solutions vs. BW Offshore |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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