Correlation Between Aker Solutions and Yara International
Can any of the company-specific risk be diversified away by investing in both Aker Solutions and Yara International 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 Yara International 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 Yara International ASA, you can compare the effects of market volatilities on Aker Solutions and Yara International 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 Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and Yara International.
Diversification Opportunities for Aker Solutions and Yara International
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aker and Yara is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International 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 Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of Aker Solutions i.e., Aker Solutions and Yara International go up and down completely randomly.
Pair Corralation between Aker Solutions and Yara International
Assuming the 90 days trading horizon Aker Solutions ASA is expected to generate 2.48 times more return on investment than Yara International. However, Aker Solutions is 2.48 times more volatile than Yara International ASA. It trades about 0.22 of its potential returns per unit of risk. Yara International ASA is currently generating about -0.12 per unit of risk. If you would invest 2,313 in Aker Solutions ASA on August 28, 2024 and sell it today you would earn a total of 687.00 from holding Aker Solutions ASA or generate 29.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Solutions ASA vs. Yara International ASA
Performance |
| Timeline |
| Aker Solutions ASA |
| Yara International ASA |
Aker Solutions and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Solutions and Yara International
The main advantage of trading using opposite Aker Solutions and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Solutions position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International'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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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