Correlation Between LifeQuest World and Aker Carbon

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

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

Diversification Opportunities for LifeQuest World and Aker Carbon

0.41

Correlation Coefficient

LifeQuest World  Aker Carbon

Very weak diversification

The 3 months correlation between LifeQuest and Aker is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding LifeQuest World 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 LifeQuest World 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 LifeQuest World 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 LifeQuest World i.e., LifeQuest World and Aker Carbon go up and down completely randomly.

Pair Corralation between LifeQuest World and Aker Carbon

Given the investment horizon of 90 days LifeQuest World is expected to generate 3.29 times more return on investment than Aker Carbon. However, LifeQuest World is 3.29 times more volatile than Aker Carbon Capture. It trades about 0.06 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about 0.0 per unit of risk. If you would invest  2.00  in LifeQuest World on September 23, 2024 and sell it today you would lose (1.42) from holding LifeQuest World or give up 71.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

LifeQuest World  vs.  Aker Carbon Capture

LifeQuest World

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LifeQuest World are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, LifeQuest World exhibited solid returns over the last few months and may actually be approaching a breakup point.

Aker Carbon Capture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Aker Carbon is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with LifeQuest World and Aker Carbon

The main advantage of trading using opposite LifeQuest World and Aker Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LifeQuest World 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.

The idea behind LifeQuest World and Aker Carbon Capture 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.