Correlation Between Finnair Oyj and Aeorema Communications
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Aeorema Communications 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 Aeorema Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Aeorema Communications Plc, you can compare the effects of market volatilities on Finnair Oyj and Aeorema Communications 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 Aeorema Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Aeorema Communications.
Diversification Opportunities for Finnair Oyj and Aeorema Communications
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finnair and Aeorema is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Aeorema Communications Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aeorema Communications 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 Aeorema Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aeorema Communications has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Aeorema Communications go up and down completely randomly.
Pair Corralation between Finnair Oyj and Aeorema Communications
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the Aeorema Communications. In addition to that, Finnair Oyj is 1.59 times more volatile than Aeorema Communications Plc. It trades about -0.08 of its total potential returns per unit of risk. Aeorema Communications Plc is currently generating about -0.09 per unit of volatility. If you would invest 5,900 in Aeorema Communications Plc on August 28, 2024 and sell it today you would lose (450.00) from holding Aeorema Communications Plc or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Finnair Oyj vs. Aeorema Communications Plc
Performance |
| Timeline |
| Finnair Oyj |
| Aeorema Communications |
Finnair Oyj and Aeorema Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Aeorema Communications
The main advantage of trading using opposite Finnair Oyj and Aeorema Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Aeorema Communications 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 Aeorema Communications will offset losses from the drop in Aeorema Communications' long position.| Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Hyundai Motor | Finnair Oyj vs. Toyota Motor Corp |
| Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Samsung Electronics Co | Aeorema Communications vs. Hyundai Motor | Aeorema Communications vs. Toyota Motor Corp |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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