Correlation Between Aker BP and Aker Horizons

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

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

Diversification Opportunities for Aker BP and Aker Horizons

-0.34

Correlation Coefficient

Aker BP  Aker Horizons

Very good diversification

The 3 months correlation between Aker and Aker is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Aker Horizons AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Horizons AS and Aker BP 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 BP ASA are associated (or correlated) with Aker Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Horizons AS has no effect on the direction of Aker BP i.e., Aker BP and Aker Horizons go up and down completely randomly.

Pair Corralation between Aker BP and Aker Horizons

Assuming the 90 days trading horizon Aker BP ASA is expected to generate 0.36 times more return on investment than Aker Horizons. However, Aker BP ASA is 2.79 times less risky than Aker Horizons. It trades about 0.12 of its potential returns per unit of risk. Aker Horizons AS is currently generating about -0.13 per unit of risk. If you would invest  21,533  in Aker BP ASA on December 30, 2024 and sell it today you would earn a total of  2,867  from holding Aker BP ASA or generate 13.31% return on investment over 90 days.

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

Aker BP ASA  vs.  Aker Horizons AS

Aker BP ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aker BP ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Aker BP displayed solid returns over the last few months and may actually be approaching a breakup point.

Aker Horizons AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Horizons AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Aker BP and Aker Horizons

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

The idea behind Aker BP ASA and Aker Horizons AS 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.