Correlation Between Aker Horizons and Everfuel

Can any of the company-specific risk be diversified away by investing in both Aker Horizons and Everfuel 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 Horizons and Everfuel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aker Horizons AS and Everfuel AS, you can compare the effects of market volatilities on Aker Horizons and Everfuel 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 Horizons with a short position of Everfuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Horizons and Everfuel.

Diversification Opportunities for Aker Horizons and Everfuel

0.19

Correlation Coefficient

Aker Horizons  Everfuel

Average diversification

The 3 months correlation between Aker and Everfuel is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Aker Horizons AS and Everfuel AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everfuel AS and Aker Horizons 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 Horizons AS are associated (or correlated) with Everfuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everfuel AS has no effect on the direction of Aker Horizons i.e., Aker Horizons and Everfuel go up and down completely randomly.

Pair Corralation between Aker Horizons and Everfuel

Assuming the 90 days trading horizon Aker Horizons AS is expected to under-perform the Everfuel. But the stock apears to be less risky and, when comparing its historical volatility, Aker Horizons AS is 1.27 times less risky than Everfuel. The stock trades about -0.07 of its potential returns per unit of risk. The Everfuel AS is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,845  in Everfuel AS on September 14, 2024 and sell it today you would lose (2,553) from holding Everfuel AS or give up 66.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Aker Horizons AS  vs.  Everfuel AS

Aker Horizons AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Horizons AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Aker Horizons is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Everfuel AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everfuel AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Everfuel is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aker Horizons and Everfuel

The main advantage of trading using opposite Aker Horizons and Everfuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Horizons position performs unexpectedly, Everfuel 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 Everfuel will offset losses from the drop in Everfuel's long position.

The idea behind Aker Horizons AS and Everfuel AS 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.

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.