Correlation Between Air Products and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Air Products and Finnair Oyj 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 Air Products and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Products Chemicals and Finnair Oyj, you can compare the effects of market volatilities on Air Products and Finnair Oyj 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 Air Products with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Products and Finnair Oyj.
Diversification Opportunities for Air Products and Finnair Oyj
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Finnair is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Air Products Chemicals and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Air Products 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 Air Products Chemicals are associated (or correlated) with Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Air Products i.e., Air Products and Finnair Oyj go up and down completely randomly.
Pair Corralation between Air Products and Finnair Oyj
Assuming the 90 days trading horizon Air Products Chemicals is expected to under-perform the Finnair Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Air Products Chemicals is 1.84 times less risky than Finnair Oyj. The stock trades about -0.01 of its potential returns per unit of risk. The Finnair Oyj is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 221.00 in Finnair Oyj on September 14, 2024 and sell it today you would earn a total of 16.00 from holding Finnair Oyj or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Products Chemicals vs. Finnair Oyj
Performance |
| Timeline |
| Air Products Chemicals |
| Finnair Oyj |
Air Products and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Products and Finnair Oyj
The main advantage of trading using opposite Air Products and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Products position performs unexpectedly, Finnair Oyj 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 Finnair Oyj will offset losses from the drop in Finnair Oyj's long position.| Air Products vs. Made Tech Group | Air Products vs. Datalogic | Air Products vs. Allianz Technology Trust | Air Products vs. Extra Space Storage |
| Finnair Oyj vs. Eastman Chemical Co | Finnair Oyj vs. Gruppo MutuiOnline SpA | Finnair Oyj vs. Westlake Chemical Corp | Finnair Oyj vs. Gamma Communications PLC |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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