Correlation Between Aker Solutions and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and Telenor 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 Telenor 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 Telenor ASA, you can compare the effects of market volatilities on Aker Solutions and Telenor 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 Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and Telenor ASA.
Diversification Opportunities for Aker Solutions and Telenor ASA
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aker and Telenor is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Aker Solutions i.e., Aker Solutions and Telenor ASA go up and down completely randomly.
Pair Corralation between Aker Solutions and Telenor ASA
Assuming the 90 days trading horizon Aker Solutions is expected to generate 1.35 times less return on investment than Telenor ASA. In addition to that, Aker Solutions is 3.0 times more volatile than Telenor ASA. It trades about 0.1 of its total potential returns per unit of risk. Telenor ASA is currently generating about 0.41 per unit of volatility. If you would invest 12,540 in Telenor ASA on October 20, 2024 and sell it today you would earn a total of 720.00 from holding Telenor ASA or generate 5.74% 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. Telenor ASA
Performance |
| Timeline |
| Aker Solutions ASA |
| Telenor ASA |
Aker Solutions and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and Telenor ASA
The main advantage of trading using opposite Aker Solutions and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, Telenor 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 Telenor ASA will offset losses from the drop in Telenor ASA'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 |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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