Correlation Between Finnair Oyj and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Compagnie Plastic 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 Compagnie Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Compagnie Plastic Omnium, you can compare the effects of market volatilities on Finnair Oyj and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Compagnie Plastic.
Diversification Opportunities for Finnair Oyj and Compagnie Plastic
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Finnair and Compagnie is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Finnair Oyj and Compagnie Plastic
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the Compagnie Plastic. In addition to that, Finnair Oyj is 1.5 times more volatile than Compagnie Plastic Omnium. It trades about -0.05 of its total potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.02 per unit of volatility. If you would invest 1,263 in Compagnie Plastic Omnium on September 3, 2024 and sell it today you would lose (398.00) from holding Compagnie Plastic Omnium or give up 31.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Finnair Oyj vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Finnair Oyj |
| Compagnie Plastic Omnium |
Finnair Oyj and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Compagnie Plastic
The main advantage of trading using opposite Finnair Oyj and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Finnair Oyj vs. Catalyst Media Group | Finnair Oyj vs. CATLIN GROUP | Finnair Oyj vs. Tamburi Investment Partners | Finnair Oyj vs. Magnora ASA |
| Compagnie Plastic vs. Catalyst Media Group | Compagnie Plastic vs. CATLIN GROUP | Compagnie Plastic vs. Tamburi Investment Partners | Compagnie Plastic vs. Magnora ASA |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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