Correlation Between Aker ASA and Schlumberger

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

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

Diversification Opportunities for Aker ASA and Schlumberger

-0.81

Correlation Coefficient

Aker ASA  Schlumberger

Pay attention - limited upside

The 3 months correlation between Aker and Schlumberger is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Schlumberger NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schlumberger NV 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 Schlumberger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schlumberger NV has no effect on the direction of Aker ASA i.e., Aker ASA and Schlumberger go up and down completely randomly.

Pair Corralation between Aker ASA and Schlumberger

Assuming the 90 days horizon Aker ASA is expected to generate 6.66 times more return on investment than Schlumberger. However, Aker ASA is 6.66 times more volatile than Schlumberger NV. It trades about 0.22 of its potential returns per unit of risk. Schlumberger NV is currently generating about -0.49 per unit of risk. If you would invest  4,225  in Aker ASA on February 6, 2024 and sell it today you would earn a total of  1,575  from holding Aker ASA or generate 37.28% return on investment over 90 days.

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

Aker ASA  vs.  Schlumberger NV

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Schlumberger NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schlumberger NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Schlumberger is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aker ASA and Schlumberger

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

The idea behind Aker ASA and Schlumberger NV 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .