Correlation Between Finnair Oyj and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Southern Copper 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 Finnair Oyj and Southern Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Southern Copper Corp, you can compare the effects of market volatilities on Finnair Oyj and Southern Copper 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 Finnair Oyj with a short position of Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Southern Copper.
Diversification Opportunities for Finnair Oyj and Southern Copper
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finnair and Southern is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Southern Copper Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper Corp and Finnair Oyj 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 Finnair Oyj are associated (or correlated) with Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper Corp has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Southern Copper go up and down completely randomly.
Pair Corralation between Finnair Oyj and Southern Copper
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 0.88 times more return on investment than Southern Copper. However, Finnair Oyj is 1.13 times less risky than Southern Copper. It trades about 0.08 of its potential returns per unit of risk. Southern Copper Corp is currently generating about 0.05 per unit of risk. If you would invest 223.00 in Finnair Oyj on September 12, 2024 and sell it today you would earn a total of 21.00 from holding Finnair Oyj or generate 9.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. Southern Copper Corp
Performance |
| Timeline |
| Finnair Oyj |
| Southern Copper Corp |
Finnair Oyj and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Southern Copper
The main advantage of trading using opposite Finnair Oyj and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Finnair Oyj vs. Neometals | Finnair Oyj vs. Blackrock World Mining | Finnair Oyj vs. Amedeo Air Four | Finnair Oyj vs. McEwen Mining |
| Southern Copper vs. Prudential Financial | Southern Copper vs. Ecclesiastical Insurance Office | Southern Copper vs. Litigation Capital Management | Southern Copper vs. OneSavings Bank PLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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