Correlation Between Kinetik Holdings and Aker ASA

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

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

Diversification Opportunities for Kinetik Holdings and Aker ASA

-0.72

Correlation Coefficient

Kinetik Holdings  Aker ASA

Pay attention - limited upside

The 3 months correlation between Kinetik and Aker is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kinetik Holdings and Aker ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker ASA and Kinetik Holdings 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 Kinetik Holdings are associated (or correlated) with Aker ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker ASA has no effect on the direction of Kinetik Holdings i.e., Kinetik Holdings and Aker ASA go up and down completely randomly.

Pair Corralation between Kinetik Holdings and Aker ASA

Given the investment horizon of 90 days Kinetik Holdings is expected to under-perform the Aker ASA. But the stock apears to be less risky and, when comparing its historical volatility, Kinetik Holdings is 7.56 times less risky than Aker ASA. The stock trades about -0.09 of its potential returns per unit of risk. The Aker ASA is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  4,225  in Aker ASA on February 3, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Kinetik Holdings  vs.  Aker ASA

Kinetik Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinetik Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Kinetik Holdings disclosed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Kinetik Holdings and Aker ASA

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

The idea behind Kinetik Holdings and Aker 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.