Correlation Between Eqva ASA and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both Eqva ASA and Aker Carbon 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 Eqva ASA and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eqva ASA and Aker Carbon Capture, you can compare the effects of market volatilities on Eqva ASA and Aker Carbon 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 Eqva ASA with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eqva ASA and Aker Carbon.
Diversification Opportunities for Eqva ASA and Aker Carbon
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Eqva and Aker is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Eqva ASA and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Eqva ASA 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 Eqva ASA are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Eqva ASA i.e., Eqva ASA and Aker Carbon go up and down completely randomly.
Pair Corralation between Eqva ASA and Aker Carbon
Assuming the 90 days trading horizon Eqva ASA is expected to generate 1.75 times more return on investment than Aker Carbon. However, Eqva ASA is 1.75 times more volatile than Aker Carbon Capture. It trades about 0.13 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.04 per unit of risk. If you would invest 445.00 in Eqva ASA on September 1, 2024 and sell it today you would earn a total of 43.00 from holding Eqva ASA or generate 9.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eqva ASA vs. Aker Carbon Capture
Performance |
| Timeline |
| Eqva ASA |
| Aker Carbon Capture |
Eqva ASA and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eqva ASA and Aker Carbon
The main advantage of trading using opposite Eqva ASA and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eqva ASA position performs unexpectedly, Aker Carbon 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 Carbon will offset losses from the drop in Aker Carbon's long position.The idea behind Eqva ASA and Aker Carbon Capture 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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