Correlation Between Var Energi and Aker BP

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

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

Diversification Opportunities for Var Energi and Aker BP

0.61

Correlation Coefficient

Var Energi  Aker BP

Poor diversification

The 3 months correlation between Var and Aker is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Aker BP ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker BP ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with Aker BP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker BP ASA has no effect on the direction of Var Energi i.e., Var Energi and Aker BP go up and down completely randomly.

Pair Corralation between Var Energi and Aker BP

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 0.93 times more return on investment than Aker BP. However, Var Energi ASA is 1.07 times less risky than Aker BP. It trades about 0.11 of its potential returns per unit of risk. Aker BP ASA is currently generating about 0.01 per unit of risk. If you would invest  3,364  in Var Energi ASA on September 12, 2024 and sell it today you would earn a total of  138.00  from holding Var Energi ASA or generate 4.1% return on investment over 90 days.

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

Var Energi ASA  vs.  Aker BP ASA

Var Energi ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aker BP ASA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aker BP ASA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Aker BP is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Var Energi and Aker BP

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

The idea behind Var Energi ASA and Aker BP ASA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.