Correlation Between REC Silicon and Aker Horizons
Can any of the company-specific risk be diversified away by investing in both REC Silicon and Aker Horizons 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 REC Silicon and Aker Horizons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Aker Horizons AS, you can compare the effects of market volatilities on REC Silicon and Aker Horizons 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 REC Silicon with a short position of Aker Horizons. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Aker Horizons.
Diversification Opportunities for REC Silicon and Aker Horizons
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between REC and Aker is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon ASA and Aker Horizons AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Horizons AS and REC Silicon 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 REC Silicon ASA are associated (or correlated) with Aker Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Horizons AS has no effect on the direction of REC Silicon i.e., REC Silicon and Aker Horizons go up and down completely randomly.
Pair Corralation between REC Silicon and Aker Horizons
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Aker Horizons. In addition to that, REC Silicon is 1.65 times more volatile than Aker Horizons AS. It trades about -0.29 of its total potential returns per unit of risk. Aker Horizons AS is currently generating about -0.34 per unit of volatility. If you would invest 275.00 in Aker Horizons AS on August 25, 2024 and sell it today you would lose (94.00) from holding Aker Horizons AS or give up 34.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Silicon ASA vs. Aker Horizons AS
Performance |
| Timeline |
| REC Silicon ASA |
| Aker Horizons AS |
REC Silicon and Aker Horizons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Aker Horizons
The main advantage of trading using opposite REC Silicon and Aker Horizons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon position performs unexpectedly, Aker Horizons 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 Horizons will offset losses from the drop in Aker Horizons' long position.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor ASA |
| Aker Horizons vs. Aker Carbon Capture | Aker Horizons vs. REC Silicon ASA | Aker Horizons vs. Aker Solutions ASA | Aker Horizons vs. Aker BP 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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