Correlation Between ITOCHU and Aker ASA
Can any of the company-specific risk be diversified away by investing in both ITOCHU 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 ITOCHU and Aker ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and Aker ASA, you can compare the effects of market volatilities on ITOCHU 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 ITOCHU with a short position of Aker ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and Aker ASA.
Diversification Opportunities for ITOCHU and Aker ASA
Significant diversification
The 3 months correlation between ITOCHU and Aker is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and Aker ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker ASA and ITOCHU 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 ITOCHU 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 ITOCHU i.e., ITOCHU and Aker ASA go up and down completely randomly.
Pair Corralation between ITOCHU and Aker ASA
Assuming the 90 days horizon ITOCHU is expected to generate 1.11 times more return on investment than Aker ASA. However, ITOCHU is 1.11 times more volatile than Aker ASA. It trades about 0.05 of its potential returns per unit of risk. Aker ASA is currently generating about 0.03 per unit of risk. If you would invest 3,825 in ITOCHU on September 2, 2024 and sell it today you would earn a total of 1,275 from holding ITOCHU or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 73.39% |
| Values | Daily Returns |
ITOCHU vs. Aker ASA
Performance |
| Timeline |
| ITOCHU |
| Aker ASA |
ITOCHU and Aker ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and Aker ASA
The main advantage of trading using opposite ITOCHU and Aker ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU 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.| ITOCHU vs. Sumitomo Corp ADR | ITOCHU vs. Mitsui Co | ITOCHU vs. Marubeni Corp ADR | ITOCHU vs. Mitsubishi Corp |
| Aker ASA vs. BCB Bancorp | Aker ASA vs. LithiumBank Resources Corp | Aker ASA vs. FiscalNote Holdings | Aker ASA vs. FactSet Research Systems |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments |