Correlation Between Aker Solutions and Oceaneering International

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

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

Diversification Opportunities for Aker Solutions and Oceaneering International

-0.31

Correlation Coefficient

Aker Solutions  Oceaneering International

Very good diversification

The 3 months correlation between Aker and Oceaneering is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Oceaneering International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceaneering International and Aker Solutions 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 Solutions ASA are associated (or correlated) with Oceaneering International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceaneering International has no effect on the direction of Aker Solutions i.e., Aker Solutions and Oceaneering International go up and down completely randomly.

Pair Corralation between Aker Solutions and Oceaneering International

Assuming the 90 days horizon Aker Solutions ASA is expected to generate 2.02 times more return on investment than Oceaneering International. However, Aker Solutions is 2.02 times more volatile than Oceaneering International. It trades about 0.07 of its potential returns per unit of risk. Oceaneering International is currently generating about 0.04 per unit of risk. If you would invest  296.00  in Aker Solutions ASA on October 4, 2024 and sell it today you would earn a total of  704.00  from holding Aker Solutions ASA or generate 237.84% return on investment over 90 days.

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

Aker Solutions ASA  vs.  Oceaneering International

Aker Solutions ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Aker Solutions showed solid returns over the last few months and may actually be approaching a breakup point.

Oceaneering International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oceaneering International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong forward indicators, Oceaneering International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Aker Solutions and Oceaneering International

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

The idea behind Aker Solutions ASA and Oceaneering International 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.

Check out your portfolio center.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.