Correlation Between Aker BP and Medistim ASA
Can any of the company-specific risk be diversified away by investing in both Aker BP and Medistim ASA 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 BP and Medistim ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker BP ASA and Medistim ASA, you can compare the effects of market volatilities on Aker BP and Medistim ASA 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 BP with a short position of Medistim ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and Medistim ASA.
Diversification Opportunities for Aker BP and Medistim ASA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aker and Medistim is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and Medistim ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medistim ASA and Aker BP 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 BP ASA are associated (or correlated) with Medistim ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medistim ASA has no effect on the direction of Aker BP i.e., Aker BP and Medistim ASA go up and down completely randomly.
Pair Corralation between Aker BP and Medistim ASA
Assuming the 90 days trading horizon Aker BP is expected to generate 3.36 times less return on investment than Medistim ASA. But when comparing it to its historical volatility, Aker BP ASA is 1.44 times less risky than Medistim ASA. It trades about 0.02 of its potential returns per unit of risk. Medistim ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,346 in Medistim ASA on March 28, 2025 and sell it today you would earn a total of 3,954 from holding Medistim ASA or generate 24.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker BP ASA vs. Medistim ASA
Performance |
| Timeline |
| Aker BP ASA |
| Medistim ASA |
Aker BP and Medistim ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker BP and Medistim ASA
The main advantage of trading using opposite Aker BP and Medistim ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker BP position performs unexpectedly, Medistim ASA 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 Medistim ASA will offset losses from the drop in Medistim ASA's long position.The idea behind Aker BP ASA and Medistim 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.| Medistim ASA vs. Kitron ASA | Medistim ASA vs. Photocure | Medistim ASA vs. AF Gruppen ASA | Medistim ASA vs. Borregaard ASA |
Check out your portfolio center.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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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