Correlation Between Vow ASA and Aker Carbon
Can any of the company-specific risk be diversified away by investing in both Vow ASA 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 Vow ASA and Aker Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Aker Carbon Capture, you can compare the effects of market volatilities on Vow ASA 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 Vow ASA with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Aker Carbon.
Diversification Opportunities for Vow ASA and Aker Carbon
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Vow and Aker is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Vow 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 Vow 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 Vow 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 Vow ASA i.e., Vow ASA and Aker Carbon go up and down completely randomly.
Pair Corralation between Vow ASA and Aker Carbon
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Aker Carbon. In addition to that, Vow ASA is 4.15 times more volatile than Aker Carbon Capture. It trades about -0.26 of its total potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.04 per unit of volatility. If you would invest 610.00 in Aker Carbon Capture on September 1, 2024 and sell it today you would lose (13.00) from holding Aker Carbon Capture or give up 2.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vow ASA vs. Aker Carbon Capture
Performance |
| Timeline |
| Vow ASA |
| Aker Carbon Capture |
Vow ASA and Aker Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Aker Carbon
The main advantage of trading using opposite Vow ASA and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA 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.| Vow ASA vs. Hexagon Composites ASA | Vow ASA vs. Vow Green Metals | Vow ASA vs. REC Silicon ASA | Vow ASA 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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