Correlation Between Aker BP and DnB ASA

Can any of the company-specific risk be diversified away by investing in both Aker BP and DnB 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 DnB 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 DnB ASA, you can compare the effects of market volatilities on Aker BP and DnB 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 DnB ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker BP and DnB ASA.

Diversification Opportunities for Aker BP and DnB ASA

0.71

Correlation Coefficient

Aker BP  DnB ASA

Poor diversification

The 3 months correlation between Aker and DnB is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Aker BP ASA and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB 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 DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Aker BP i.e., Aker BP and DnB ASA go up and down completely randomly.

Pair Corralation between Aker BP and DnB ASA

Assuming the 90 days trading horizon Aker BP ASA is expected to generate 1.11 times more return on investment than DnB ASA. However, Aker BP is 1.11 times more volatile than DnB ASA. It trades about 0.15 of its potential returns per unit of risk. DnB ASA is currently generating about 0.07 per unit of risk. If you would invest  21,027  in Aker BP ASA on April 22, 2025 and sell it today you would earn a total of  3,613  from holding Aker BP ASA or generate 17.18% 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.  DnB ASA

Aker BP ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aker BP ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Aker BP displayed solid returns over the last few months and may actually be approaching a breakup point.

DnB ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, DnB ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Aker BP and DnB ASA

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

The idea behind Aker BP ASA and DnB 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.