Correlation Between North Energy and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both North Energy 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 North Energy and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Aker Carbon Capture, you can compare the effects of market volatilities on North Energy 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 North Energy with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Aker Carbon.
Diversification Opportunities for North Energy and Aker Carbon
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between North and Aker is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding North Energy 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 North Energy 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 North Energy 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 North Energy i.e., North Energy and Aker Carbon go up and down completely randomly.
Pair Corralation between North Energy and Aker Carbon
Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.88 times more return on investment than Aker Carbon. However, North Energy ASA is 1.14 times less risky than Aker Carbon. It trades about 0.05 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 265.00 in North Energy ASA on September 1, 2024 and sell it today you would earn a total of 5.00 from holding North Energy ASA or generate 1.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Aker Carbon Capture
Performance |
| Timeline |
| North Energy ASA |
| Aker Carbon Capture |
North Energy and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Aker Carbon
The main advantage of trading using opposite North Energy and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy 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.| North Energy vs. Skue Sparebank | North Energy vs. Aasen Sparebank | North Energy vs. Proximar Seafood AS | North Energy vs. Nidaros Sparebank |
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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