Correlation Between Aker Solutions and Frontline

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

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

Diversification Opportunities for Aker Solutions and Frontline

0.59

Correlation Coefficient

Aker Solutions  Frontline

Very weak diversification

The 3 months correlation between Aker and Frontline is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aker Solutions ASA and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Aker Solutions 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 Solutions ASA are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Aker Solutions i.e., Aker Solutions and Frontline go up and down completely randomly.

Pair Corralation between Aker Solutions and Frontline

Assuming the 90 days trading horizon Aker Solutions is expected to generate 1.06 times less return on investment than Frontline. But when comparing it to its historical volatility, Aker Solutions ASA is 1.14 times less risky than Frontline. It trades about 0.09 of its potential returns per unit of risk. Frontline is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  16,401  in Frontline on April 24, 2025 and sell it today you would earn a total of  2,109  from holding Frontline or generate 12.86% return on investment over 90 days.

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

Aker Solutions ASA  vs.  Frontline

Aker Solutions ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aker Solutions ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Aker Solutions disclosed solid returns over the last few months and may actually be approaching a breakup point.

Frontline

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Frontline are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Frontline disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aker Solutions and Frontline

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

The idea behind Aker Solutions ASA and Frontline 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.