Correlation Between BW Offshore and Aker ASA
Can any of the company-specific risk be diversified away by investing in both BW Offshore and Aker 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 BW Offshore and Aker ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BW Offshore and Aker ASA, you can compare the effects of market volatilities on BW Offshore and Aker 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 BW Offshore with a short position of Aker ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of BW Offshore and Aker ASA.
Diversification Opportunities for BW Offshore and Aker ASA
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BWO and Aker is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BW Offshore and Aker ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker ASA and BW Offshore 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 BW Offshore are associated (or correlated) with Aker ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker ASA has no effect on the direction of BW Offshore i.e., BW Offshore and Aker ASA go up and down completely randomly.
Pair Corralation between BW Offshore and Aker ASA
Assuming the 90 days trading horizon BW Offshore is expected to under-perform the Aker ASA. In addition to that, BW Offshore is 1.87 times more volatile than Aker ASA. It trades about 0.0 of its total potential returns per unit of risk. Aker ASA is currently generating about 0.01 per unit of volatility. If you would invest 56,296 in Aker ASA on August 29, 2024 and sell it today you would earn a total of 404.00 from holding Aker ASA or generate 0.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BW Offshore vs. Aker ASA
Performance |
| Timeline |
| BW Offshore |
| Aker ASA |
BW Offshore and Aker ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BW Offshore and Aker ASA
The main advantage of trading using opposite BW Offshore and Aker ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BW Offshore position performs unexpectedly, Aker 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 Aker ASA will offset losses from the drop in Aker ASA's long position.The idea behind BW Offshore and Aker ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aker ASA vs. Storebrand ASA | Aker ASA vs. Aker Solutions ASA | Aker ASA vs. DnB ASA | Aker ASA vs. Orkla 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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