Correlation Between Napatech and Aker Carbon

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

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

Diversification Opportunities for Napatech and Aker Carbon

0.4

Correlation Coefficient

Napatech  Aker Carbon

Very weak diversification

The 3 months correlation between Napatech and Aker is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Napatech AS and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and Napatech 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 Napatech AS are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Napatech i.e., Napatech and Aker Carbon go up and down completely randomly.

Pair Corralation between Napatech and Aker Carbon

Assuming the 90 days trading horizon Napatech AS is expected to under-perform the Aker Carbon. In addition to that, Napatech is 1.37 times more volatile than Aker Carbon Capture. It trades about -0.19 of its total potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.01 per unit of volatility. If you would invest  610.00  in Aker Carbon Capture on September 16, 2024 and sell it today you would lose (13.00) from holding Aker Carbon Capture or give up 2.13% of portfolio value over 90 days.

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

Napatech AS  vs.  Aker Carbon Capture

Napatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Napatech 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 essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Aker Carbon Capture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Aker Carbon is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Napatech and Aker Carbon

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

The idea behind Napatech AS and Aker Carbon Capture 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.