Correlation Between Aker ASA and Atea ASA

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

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

Diversification Opportunities for Aker ASA and Atea ASA

-0.36

Correlation Coefficient

Aker ASA  Atea ASA

Very good diversification

The 3 months correlation between Aker and Atea is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Atea ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atea ASA and Aker 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 Aker ASA are associated (or correlated) with Atea ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atea ASA has no effect on the direction of Aker ASA i.e., Aker ASA and Atea ASA go up and down completely randomly.

Pair Corralation between Aker ASA and Atea ASA

Assuming the 90 days trading horizon Aker ASA is expected to generate 0.99 times more return on investment than Atea ASA. However, Aker ASA is 1.01 times less risky than Atea ASA. It trades about 0.15 of its potential returns per unit of risk. Atea ASA is currently generating about -0.08 per unit of risk. If you would invest  54,900  in Aker ASA on December 29, 2024 and sell it today you would earn a total of  7,600  from holding Aker ASA or generate 13.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aker ASA  vs.  Atea ASA

Aker ASA

Risk-Adjusted Performance

Good

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

Atea ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Atea ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Aker ASA and Atea ASA

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

The idea behind Aker ASA and Atea 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.