Correlation Between Akastor ASA and Aker Solutions

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

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

Diversification Opportunities for Akastor ASA and Aker Solutions

0.26

Correlation Coefficient

Akastor ASA  Aker Solutions

Modest diversification

The 3 months correlation between Akastor and Aker is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Akastor ASA and Aker Solutions ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Solutions ASA and Akastor ASA 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 Akastor ASA are associated (or correlated) with Aker Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Solutions ASA has no effect on the direction of Akastor ASA i.e., Akastor ASA and Aker Solutions go up and down completely randomly.

Pair Corralation between Akastor ASA and Aker Solutions

Assuming the 90 days trading horizon Akastor ASA is expected to generate 0.73 times more return on investment than Aker Solutions. However, Akastor ASA is 1.37 times less risky than Aker Solutions. It trades about 0.07 of its potential returns per unit of risk. Aker Solutions ASA is currently generating about 0.05 per unit of risk. If you would invest  1,266  in Akastor ASA on November 29, 2024 and sell it today you would earn a total of  84.00  from holding Akastor ASA or generate 6.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Akastor ASA  vs.  Aker Solutions ASA

Akastor ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akastor ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Akastor ASA may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Aker Solutions ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Aker Solutions may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Akastor ASA and Aker Solutions

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

The idea behind Akastor ASA and Aker Solutions 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.