Correlation Between Santos and Aker BP
Can any of the company-specific risk be diversified away by investing in both Santos 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 Santos and Aker BP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Santos Ltd ADR and Aker BP ASA, you can compare the effects of market volatilities on Santos 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 Santos with a short position of Aker BP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Santos and Aker BP.
Diversification Opportunities for Santos and Aker BP
Good diversification
The 3 months correlation between Santos and Aker is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Santos Ltd ADR 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 Santos 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 Santos Ltd ADR 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 Santos i.e., Santos and Aker BP go up and down completely randomly.
Pair Corralation between Santos and Aker BP
If you would invest 1,030 in Aker BP ASA on September 1, 2024 and sell it today you would lose (10.00) from holding Aker BP ASA or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Santos Ltd ADR vs. Aker BP ASA
Performance |
| Timeline |
| Santos Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Aker BP ASA |
Santos and Aker BP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Santos and Aker BP
The main advantage of trading using opposite Santos and Aker BP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Santos 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.| Santos vs. Aker BP ASA | Santos vs. Woodside Energy Group | Santos vs. APA Corporation | Santos vs. EQT Corporation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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