Correlation Between Aker Solutions and Black Sea

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

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

Diversification Opportunities for Aker Solutions and Black Sea

-0.68

Correlation Coefficient

Aker Solutions  Black Sea

Excellent diversification

The 3 months correlation between Aker and Black is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Black Sea Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Sea Property and Aker Solutions 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 Solutions ASA are associated (or correlated) with Black Sea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Sea Property has no effect on the direction of Aker Solutions i.e., Aker Solutions and Black Sea go up and down completely randomly.

Pair Corralation between Aker Solutions and Black Sea

Assuming the 90 days trading horizon Aker Solutions is expected to generate 14.28 times less return on investment than Black Sea. But when comparing it to its historical volatility, Aker Solutions ASA is 21.44 times less risky than Black Sea. It trades about 0.15 of its potential returns per unit of risk. Black Sea Property is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Black Sea Property on September 15, 2024 and sell it today you would lose (4.00) from holding Black Sea Property or give up 23.53% of portfolio value over 90 days.

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

Aker Solutions ASA  vs.  Black Sea Property

Aker Solutions ASA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Aker Solutions disclosed solid returns over the last few months and may actually be approaching a breakup point.

Black Sea Property

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Black Sea Property are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Black Sea disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aker Solutions and Black Sea

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

The idea behind Aker Solutions ASA and Black Sea Property 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.