Correlation Between Aker ASA and Akva
Can any of the company-specific risk be diversified away by investing in both Aker ASA and Akva 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 Aker ASA and Akva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker ASA and Akva Group, you can compare the effects of market volatilities on Aker ASA and Akva 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 Aker ASA with a short position of Akva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and Akva.
Diversification Opportunities for Aker ASA and Akva
Very poor diversification
The 3 months correlation between Aker and Akva is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Akva Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akva Group and Aker 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 Aker ASA are associated (or correlated) with Akva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akva Group has no effect on the direction of Aker ASA i.e., Aker ASA and Akva go up and down completely randomly.
Pair Corralation between Aker ASA and Akva
Assuming the 90 days trading horizon Aker ASA is expected to generate 2.33 times less return on investment than Akva. But when comparing it to its historical volatility, Aker ASA is 1.39 times less risky than Akva. It trades about 0.08 of its potential returns per unit of risk. Akva Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,820 in Akva Group on September 26, 2024 and sell it today you would earn a total of 920.00 from holding Akva Group or generate 15.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Aker ASA vs. Akva Group
Performance |
Timeline |
Aker ASA |
Akva Group |
Aker ASA and Akva Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aker ASA and Akva
The main advantage of trading using opposite Aker ASA and Akva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA position performs unexpectedly, Akva 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 Akva will offset losses from the drop in Akva's long position.Aker ASA vs. Sparebank 1 Nord Norge | Aker ASA vs. Sparebanken Vest | Aker ASA vs. Storebrand ASA | Aker ASA vs. Gjensidige Forsikring 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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