Correlation Between SpareBank and Aker Carbon

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

By analyzing existing cross correlation between SpareBank 1 stlandet and Aker Carbon Capture, you can compare the effects of market volatilities on SpareBank and Aker Carbon 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 SpareBank with a short position of Aker Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpareBank and Aker Carbon.

Diversification Opportunities for SpareBank and Aker Carbon

-0.15

Correlation Coefficient

SpareBank  Aker Carbon

Good diversification

The 3 months correlation between SpareBank and Aker is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SpareBank 1 stlandet and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture and SpareBank 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 SpareBank 1 stlandet are associated (or correlated) with Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of SpareBank i.e., SpareBank and Aker Carbon go up and down completely randomly.

Pair Corralation between SpareBank and Aker Carbon

Assuming the 90 days trading horizon SpareBank 1 stlandet is expected to under-perform the Aker Carbon. But the stock apears to be less risky and, when comparing its historical volatility, SpareBank 1 stlandet is 2.35 times less risky than Aker Carbon. The stock trades about -0.07 of its potential returns per unit of risk. The Aker Carbon Capture is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Aker Carbon Capture on March 9, 2024 and sell it today you would earn a total of  9.00  from holding Aker Carbon Capture or generate 1.29% return on investment over 90 days.

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

SpareBank 1 stlandet  vs.  Aker Carbon Capture

SpareBank 1 stlandet

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SpareBank 1 stlandet are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, SpareBank disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SpareBank and Aker Carbon

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

The idea behind SpareBank 1 stlandet and Aker Carbon Capture 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.