Correlation Between AMG Advanced and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both AMG Advanced 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 AMG Advanced and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMG Advanced Metallurgical and Finnair Oyj, you can compare the effects of market volatilities on AMG Advanced 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 AMG Advanced with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMG Advanced and Finnair Oyj.
Diversification Opportunities for AMG Advanced and Finnair Oyj
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMG and Finnair is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AMG Advanced Metallurgical and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and AMG Advanced 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 AMG Advanced Metallurgical 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 AMG Advanced i.e., AMG Advanced and Finnair Oyj go up and down completely randomly.
Pair Corralation between AMG Advanced and Finnair Oyj
Assuming the 90 days trading horizon AMG Advanced Metallurgical is expected to generate 0.68 times more return on investment than Finnair Oyj. However, AMG Advanced Metallurgical is 1.46 times less risky than Finnair Oyj. It trades about -0.06 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.04 per unit of risk. If you would invest 3,306 in AMG Advanced Metallurgical on September 24, 2024 and sell it today you would lose (1,959) from holding AMG Advanced Metallurgical or give up 59.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMG Advanced Metallurgical vs. Finnair Oyj
Performance |
| Timeline |
| AMG Advanced Metallu |
| Finnair Oyj |
AMG Advanced and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMG Advanced and Finnair Oyj
The main advantage of trading using opposite AMG Advanced and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMG Advanced 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.| AMG Advanced vs. Uniper SE | AMG Advanced vs. Mulberry Group PLC | AMG Advanced vs. London Security Plc | AMG Advanced vs. Triad Group PLC |
| Finnair Oyj vs. Silvercorp Metals | Finnair Oyj vs. Ross Stores | Finnair Oyj vs. AMG Advanced Metallurgical | Finnair Oyj vs. Cornish Metals |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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