Correlation Between Worley and Aker Solutions

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Can any of the company-specific risk be diversified away by investing in both Worley 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 Worley and Aker Solutions into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worley Limited and Aker Solutions ASA, you can compare the effects of market volatilities on Worley 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 Worley with a short position of Aker Solutions. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worley and Aker Solutions.

Diversification Opportunities for Worley and Aker Solutions

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Worley and Aker is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Worley 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 Worley 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 Worley 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 Worley i.e., Worley and Aker Solutions go up and down completely randomly.

Pair Corralation between Worley and Aker Solutions

Assuming the 90 days horizon Worley Limited is expected to under-perform the Aker Solutions. But the pink sheet apears to be less risky and, when comparing its historical volatility, Worley Limited is 2.75 times less risky than Aker Solutions. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Aker Solutions ASA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  296.00  in Aker Solutions ASA on September 22, 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 Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy82.06%
ValuesDaily Returns

Worley Limited  vs.  Aker Solutions ASA

 Performance 
       Timeline  
Worley Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Worley Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Aker Solutions ASA 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
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.

Worley and Aker Solutions Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Worley and Aker Solutions

The main advantage of trading using opposite Worley and Aker Solutions positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worley 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 Worley 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.
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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