Correlation Between Aker Solutions and TGS NOPEC

Can any of the company-specific risk be diversified away by investing in both Aker Solutions and TGS NOPEC 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 TGS NOPEC 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 TGS NOPEC Geophysical, you can compare the effects of market volatilities on Aker Solutions and TGS NOPEC 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 TGS NOPEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Solutions and TGS NOPEC.

Diversification Opportunities for Aker Solutions and TGS NOPEC

0.43

Correlation Coefficient

Aker Solutions  TGS NOPEC

Very weak diversification

The 3 months correlation between Aker and TGS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and TGS NOPEC Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS NOPEC Geophysical 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 TGS NOPEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS NOPEC Geophysical has no effect on the direction of Aker Solutions i.e., Aker Solutions and TGS NOPEC go up and down completely randomly.

Pair Corralation between Aker Solutions and TGS NOPEC

Assuming the 90 days trading horizon Aker Solutions ASA is expected to generate 1.14 times more return on investment than TGS NOPEC. However, Aker Solutions is 1.14 times more volatile than TGS NOPEC Geophysical. It trades about 0.16 of its potential returns per unit of risk. TGS NOPEC Geophysical is currently generating about 0.01 per unit of risk. If you would invest  2,450  in Aker Solutions ASA on September 3, 2024 and sell it today you would earn a total of  696.00  from holding Aker Solutions ASA or generate 28.41% return on investment over 90 days.

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

Aker Solutions ASA  vs.  TGS NOPEC Geophysical

Aker Solutions ASA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 12 (%) 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.

TGS NOPEC Geophysical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aker Solutions and TGS NOPEC

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

The idea behind Aker Solutions ASA and TGS NOPEC Geophysical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.