Correlation Between Subsea 7 and Aker Solutions
Can any of the company-specific risk be diversified away by investing in both Subsea 7 and Aker Solutions 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 Subsea 7 and Aker Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Subsea 7 SA and Aker Solutions ASA, you can compare the effects of market volatilities on Subsea 7 and Aker Solutions 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 Subsea 7 with a short position of Aker Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Subsea 7 and Aker Solutions.
Diversification Opportunities for Subsea 7 and Aker Solutions
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Subsea and Aker is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Subsea 7 SA and Aker Solutions ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Solutions ASA and Subsea 7 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 Subsea 7 SA are associated (or correlated) with Aker Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Solutions ASA has no effect on the direction of Subsea 7 i.e., Subsea 7 and Aker Solutions go up and down completely randomly.
Pair Corralation between Subsea 7 and Aker Solutions
Assuming the 90 days trading horizon Subsea 7 SA is expected to under-perform the Aker Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Subsea 7 SA is 1.44 times less risky than Aker Solutions. The stock trades about -0.03 of its potential returns per unit of risk. The Aker Solutions ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,724 in Aker Solutions ASA on August 25, 2024 and sell it today you would earn a total of 306.00 from holding Aker Solutions ASA or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.48% |
| Values | Daily Returns |
Subsea 7 SA vs. Aker Solutions ASA
Performance |
| Timeline |
| Subsea 7 SA |
| Aker Solutions ASA |
Subsea 7 and Aker Solutions Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Subsea 7 and Aker Solutions
The main advantage of trading using opposite Subsea 7 and Aker Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Subsea 7 position performs unexpectedly, Aker Solutions 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 Solutions will offset losses from the drop in Aker Solutions' long position.The idea behind Subsea 7 SA and Aker Solutions ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aker Solutions vs. Subsea 7 SA | Aker Solutions vs. Aker ASA | Aker Solutions vs. Dno ASA | Aker Solutions vs. Aker Carbon Capture |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |