Correlation Between Mowi ASA and Aker BP
Can any of the company-specific risk be diversified away by investing in both Mowi ASA and Aker BP 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 Mowi ASA and Aker BP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mowi ASA and Aker BP ASA, you can compare the effects of market volatilities on Mowi ASA and Aker BP 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 Mowi ASA with a short position of Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mowi ASA and Aker BP.
Diversification Opportunities for Mowi ASA and Aker BP
Good diversification
The 3 months correlation between Mowi and Aker is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mowi ASA and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP ASA and Mowi 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 Mowi ASA are associated (or correlated) with Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of Mowi ASA i.e., Mowi ASA and Aker BP go up and down completely randomly.
Pair Corralation between Mowi ASA and Aker BP
Assuming the 90 days trading horizon Mowi ASA is expected to generate 2.39 times less return on investment than Aker BP. But when comparing it to its historical volatility, Mowi ASA is 1.08 times less risky than Aker BP. It trades about 0.04 of its potential returns per unit of risk. Aker BP ASA is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 21,885 in Aker BP ASA on August 29, 2024 and sell it today you would earn a total of 705.00 from holding Aker BP ASA or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mowi ASA vs. Aker BP ASA
Performance |
| Timeline |
| Mowi ASA |
| Aker BP ASA |
Mowi ASA and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mowi ASA and Aker BP
The main advantage of trading using opposite Mowi ASA and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mowi ASA position performs unexpectedly, Aker BP 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 BP will offset losses from the drop in Aker BP's long position.| Mowi ASA vs. Andfjord Salmon AS | Mowi ASA vs. Elkem ASA | Mowi ASA vs. Vow ASA | Mowi ASA vs. North Energy 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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