Correlation Between Bouvet and Aker Solutions
Can any of the company-specific risk be diversified away by investing in both Bouvet and Aker Solutions 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 Bouvet and Aker Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouvet and Aker Solutions ASA, you can compare the effects of market volatilities on Bouvet and Aker Solutions 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 Bouvet with a short position of Aker Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouvet and Aker Solutions.
Diversification Opportunities for Bouvet and Aker Solutions
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bouvet and Aker is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bouvet and Aker Solutions ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Solutions ASA and Bouvet 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 Bouvet are associated (or correlated) with Aker Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Solutions ASA has no effect on the direction of Bouvet i.e., Bouvet and Aker Solutions go up and down completely randomly.
Pair Corralation between Bouvet and Aker Solutions
Assuming the 90 days trading horizon Bouvet is expected to generate 0.59 times more return on investment than Aker Solutions. However, Bouvet is 1.71 times less risky than Aker Solutions. It trades about 0.27 of its potential returns per unit of risk. Aker Solutions ASA is currently generating about 0.1 per unit of risk. If you would invest 7,500 in Bouvet on October 20, 2024 and sell it today you would earn a total of 470.00 from holding Bouvet or generate 6.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Bouvet vs. Aker Solutions ASA
Performance |
| Timeline |
| Bouvet |
| Aker Solutions ASA |
Bouvet and Aker Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouvet and Aker Solutions
The main advantage of trading using opposite Bouvet and Aker Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouvet position performs unexpectedly, Aker Solutions 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 Aker Solutions will offset losses from the drop in Aker Solutions' long position.| Bouvet vs. Huddlestock Fintech As | Bouvet vs. Xplora Technologies As | Bouvet vs. Polight ASA | Bouvet vs. Elkem ASA |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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