Correlation Between Aker Solutions and REC Silicon
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and REC Silicon 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 REC Silicon 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 REC Silicon ASA, you can compare the effects of market volatilities on Aker Solutions and REC Silicon 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 REC Silicon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and REC Silicon.
Diversification Opportunities for Aker Solutions and REC Silicon
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and REC is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and REC Silicon ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REC Silicon 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 REC Silicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REC Silicon ASA has no effect on the direction of Aker Solutions i.e., Aker Solutions and REC Silicon go up and down completely randomly.
Pair Corralation between Aker Solutions and REC Silicon
Assuming the 90 days trading horizon Aker Solutions ASA is expected to generate 0.32 times more return on investment than REC Silicon. However, Aker Solutions ASA is 3.14 times less risky than REC Silicon. It trades about 0.09 of its potential returns per unit of risk. REC Silicon ASA is currently generating about -0.06 per unit of risk. If you would invest 2,627 in Aker Solutions ASA on August 29, 2024 and sell it today you would earn a total of 373.00 from holding Aker Solutions ASA or generate 14.2% 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. REC Silicon ASA
Performance |
| Timeline |
| Aker Solutions ASA |
| REC Silicon ASA |
Aker Solutions and REC Silicon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and REC Silicon
The main advantage of trading using opposite Aker Solutions and REC Silicon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, REC Silicon 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 REC Silicon will offset losses from the drop in REC Silicon's long position.| Aker Solutions vs. Subsea 7 SA | Aker Solutions vs. Aker ASA | Aker Solutions vs. Dno ASA | Aker Solutions vs. Aker Carbon Capture |
| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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