Correlation Between Finnair Oyj and Advanced Medical
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Advanced Medical 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 Advanced Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and Advanced Medical Solutions, you can compare the effects of market volatilities on Finnair Oyj and Advanced Medical 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 Advanced Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Advanced Medical.
Diversification Opportunities for Finnair Oyj and Advanced Medical
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Finnair and Advanced is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Advanced Medical go up and down completely randomly.
Pair Corralation between Finnair Oyj and Advanced Medical
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the Advanced Medical. In addition to that, Finnair Oyj is 1.53 times more volatile than Advanced Medical Solutions. It trades about -0.03 of its total potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.01 per unit of volatility. If you would invest 23,207 in Advanced Medical Solutions on November 27, 2024 and sell it today you would lose (1,957) from holding Advanced Medical Solutions or give up 8.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Finnair Oyj vs. Advanced Medical Solutions
Performance |
| Timeline |
| Finnair Oyj |
| Advanced Medical Sol |
Finnair Oyj and Advanced Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Advanced Medical
The main advantage of trading using opposite Finnair Oyj and Advanced Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Advanced Medical 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 Advanced Medical will offset losses from the drop in Advanced Medical's long position.| Finnair Oyj vs. Learning Technologies Group | Finnair Oyj vs. Nordea Bank Abp | Finnair Oyj vs. Tetragon Financial Group | Finnair Oyj vs. Westlake Chemical Corp |
| Advanced Medical vs. International Biotechnology Trust | Advanced Medical vs. Ashtead Technology Holdings | Advanced Medical vs. Clean Power Hydrogen | Advanced Medical vs. Ross Stores |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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