Correlation Between Akastor ASA and Saipem SpA

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

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

Diversification Opportunities for Akastor ASA and Saipem SpA

-0.57

Correlation Coefficient

Akastor ASA  Saipem SpA

Excellent diversification

The 3 months correlation between Akastor and Saipem is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Akastor ASA and Saipem SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saipem SpA 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 Saipem SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saipem SpA has no effect on the direction of Akastor ASA i.e., Akastor ASA and Saipem SpA go up and down completely randomly.

Pair Corralation between Akastor ASA and Saipem SpA

Assuming the 90 days horizon Akastor ASA is expected to under-perform the Saipem SpA. In addition to that, Akastor ASA is 1.1 times more volatile than Saipem SpA. It trades about -0.23 of its total potential returns per unit of risk. Saipem SpA is currently generating about 0.23 per unit of volatility. If you would invest  256.00  in Saipem SpA on October 17, 2024 and sell it today you would earn a total of  28.00  from holding Saipem SpA or generate 10.94% return on investment over 90 days.

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

Akastor ASA  vs.  Saipem SpA

Akastor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Akastor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Saipem SpA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Saipem SpA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Saipem SpA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Akastor ASA and Saipem SpA

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

The idea behind Akastor ASA and Saipem SpA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.