Correlation Between Finnair Oyj and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Gamma 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 Gamma 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 Gamma Communications PLC, you can compare the effects of market volatilities on Finnair Oyj and Gamma 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Gamma Communications.
Diversification Opportunities for Finnair Oyj and Gamma Communications
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and Gamma is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications PLC 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Gamma Communications go up and down completely randomly.
Pair Corralation between Finnair Oyj and Gamma Communications
Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the Gamma Communications. In addition to that, Finnair Oyj is 2.53 times more volatile than Gamma Communications PLC. It trades about -0.05 of its total potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.03 per unit of volatility. If you would invest 112,122 in Gamma Communications PLC on November 1, 2024 and sell it today you would earn a total of 21,078 from holding Gamma Communications PLC or generate 18.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Finnair Oyj vs. Gamma Communications PLC
Performance |
| Timeline |
| Finnair Oyj |
| Gamma Communications PLC |
Finnair Oyj and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and Gamma Communications
The main advantage of trading using opposite Finnair Oyj and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, Gamma 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 Gamma Communications will offset losses from the drop in Gamma Communications' long position.| Finnair Oyj vs. Axway Software SA | Finnair Oyj vs. CleanTech Lithium plc | Finnair Oyj vs. Auction Technology Group | Finnair Oyj vs. Scandinavian Tobacco Group |
| Gamma Communications vs. Eastinco Mining Exploration | Gamma Communications vs. Griffin Mining | Gamma Communications vs. Bisichi Mining PLC | Gamma Communications vs. Lundin Mining 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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