Correlation Between Finnair Oyj and AMG Advanced
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and AMG Advanced 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 AMG Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and AMG Advanced Metallurgical, you can compare the effects of market volatilities on Finnair Oyj and AMG Advanced 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 AMG Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and AMG Advanced.
Diversification Opportunities for Finnair Oyj and AMG Advanced
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finnair and AMG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and AMG Advanced Metallurgical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMG Advanced Metallu 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 AMG Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMG Advanced Metallu has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and AMG Advanced go up and down completely randomly.
Pair Corralation between Finnair Oyj and AMG Advanced
Assuming the 90 days trading horizon Finnair Oyj is expected to generate 0.71 times more return on investment than AMG Advanced. However, Finnair Oyj is 1.4 times less risky than AMG Advanced. It trades about -0.21 of its potential returns per unit of risk. AMG Advanced Metallurgical is currently generating about -0.22 per unit of risk. If you would invest 230.00 in Finnair Oyj on September 3, 2024 and sell it today you would lose (15.00) from holding Finnair Oyj or give up 6.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finnair Oyj vs. AMG Advanced Metallurgical
Performance |
| Timeline |
| Finnair Oyj |
| AMG Advanced Metallu |
Finnair Oyj and AMG Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and AMG Advanced
The main advantage of trading using opposite Finnair Oyj and AMG Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, AMG Advanced 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 AMG Advanced will offset losses from the drop in AMG Advanced's long position.| Finnair Oyj vs. Catalyst Media Group | Finnair Oyj vs. CATLIN GROUP | Finnair Oyj vs. Magnora ASA | Finnair Oyj vs. RTW Venture Fund |
| AMG Advanced vs. Catalyst Media Group | AMG Advanced vs. CATLIN GROUP | AMG Advanced vs. Magnora ASA | AMG Advanced vs. RTW Venture Fund |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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