Correlation Between Toro Energy and Aker Solutions

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

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

Diversification Opportunities for Toro Energy and Aker Solutions

-0.36

Correlation Coefficient

Toro Energy  Aker Solutions

Very good diversification

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

Pair Corralation between Toro Energy and Aker Solutions

Assuming the 90 days horizon Toro Energy Limited is expected to under-perform the Aker Solutions. But the pink sheet apears to be less risky and, when comparing its historical volatility, Toro Energy Limited is 2.49 times less risky than Aker Solutions. The pink sheet trades about -0.44 of its potential returns per unit of risk. The Aker Solutions ASA is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Aker Solutions ASA on September 22, 2024 and sell it today you would earn a total of  461.00  from holding Aker Solutions ASA or generate 85.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Toro Energy Limited  vs.  Aker Solutions ASA

Toro Energy Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Toro Energy Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Toro Energy reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Toro Energy and Aker Solutions

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

The idea behind Toro Energy Limited and Aker Solutions 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.