Correlation Between Aker Solutions and Subsea 7
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and Subsea 7 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 Subsea 7 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 Subsea 7 SA, you can compare the effects of market volatilities on Aker Solutions and Subsea 7 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 Subsea 7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and Subsea 7.
Diversification Opportunities for Aker Solutions and Subsea 7
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aker and Subsea is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Subsea 7 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subsea 7 SA 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 Subsea 7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subsea 7 SA has no effect on the direction of Aker Solutions i.e., Aker Solutions and Subsea 7 go up and down completely randomly.
Pair Corralation between Aker Solutions and Subsea 7
Assuming the 90 days trading horizon Aker Solutions ASA is expected to generate 2.14 times more return on investment than Subsea 7. However, Aker Solutions is 2.14 times more volatile than Subsea 7 SA. It trades about 0.2 of its potential returns per unit of risk. Subsea 7 SA is currently generating about 0.07 per unit of risk. If you would invest 2,564 in Aker Solutions ASA on August 29, 2024 and sell it today you would earn a total of 436.00 from holding Aker Solutions ASA or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Solutions ASA vs. Subsea 7 SA
Performance |
| Timeline |
| Aker Solutions ASA |
| Subsea 7 SA |
Aker Solutions and Subsea 7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and Subsea 7
The main advantage of trading using opposite Aker Solutions and Subsea 7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, Subsea 7 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 Subsea 7 will offset losses from the drop in Subsea 7'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 |
| Subsea 7 vs. TGS NOPEC Geophysical | Subsea 7 vs. Aker Solutions ASA | Subsea 7 vs. Storebrand ASA | Subsea 7 vs. Dno 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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