Correlation Between Aker ASA and NOV

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

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

Diversification Opportunities for Aker ASA and NOV

-0.1

Correlation Coefficient

Aker ASA  NOV

Good diversification

The 3 months correlation between Aker and NOV is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc and Aker ASA 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 ASA are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Aker ASA i.e., Aker ASA and NOV go up and down completely randomly.

Pair Corralation between Aker ASA and NOV

Assuming the 90 days horizon Aker ASA is expected to generate 7.95 times more return on investment than NOV. However, Aker ASA is 7.95 times more volatile than NOV Inc. It trades about 0.07 of its potential returns per unit of risk. NOV Inc is currently generating about -0.12 per unit of risk. If you would invest  5,460  in Aker ASA on January 20, 2024 and sell it today you would earn a total of  315.00  from holding Aker ASA or generate 5.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Aker ASA  vs.  NOV Inc

Aker ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aker ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aker ASA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NOV Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NOV is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Aker ASA and NOV

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

The idea behind Aker ASA and NOV Inc 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.