Correlation Between Aker Carbon and Bonheur

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

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

Diversification Opportunities for Aker Carbon and Bonheur

-0.05

Correlation Coefficient

Aker Carbon  Bonheur

Good diversification

The 3 months correlation between Aker and Bonheur is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Bonheur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonheur and Aker Carbon 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 Carbon Capture are associated (or correlated) with Bonheur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonheur has no effect on the direction of Aker Carbon i.e., Aker Carbon and Bonheur go up and down completely randomly.

Pair Corralation between Aker Carbon and Bonheur

Assuming the 90 days trading horizon Aker Carbon is expected to generate 1.2 times less return on investment than Bonheur. In addition to that, Aker Carbon is 1.8 times more volatile than Bonheur. It trades about 0.03 of its total potential returns per unit of risk. Bonheur is currently generating about 0.07 per unit of volatility. If you would invest  23,808  in Bonheur on March 10, 2024 and sell it today you would earn a total of  392.00  from holding Bonheur or generate 1.65% return on investment over 90 days.

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

Aker Carbon Capture  vs.  Bonheur

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.

Bonheur

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bonheur are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Bonheur displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aker Carbon and Bonheur

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

The idea behind Aker Carbon Capture and Bonheur 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.