Correlation Between Alandsbanken Abp and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Alandsbanken Abp 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 Alandsbanken Abp and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alandsbanken Abp A and Finnair Oyj, you can compare the effects of market volatilities on Alandsbanken Abp 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 Alandsbanken Abp with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alandsbanken Abp and Finnair Oyj.
Diversification Opportunities for Alandsbanken Abp and Finnair Oyj
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alandsbanken and Finnair is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Alandsbanken Abp A and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Alandsbanken Abp 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 Alandsbanken Abp A 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 Alandsbanken Abp i.e., Alandsbanken Abp and Finnair Oyj go up and down completely randomly.
Pair Corralation between Alandsbanken Abp and Finnair Oyj
Assuming the 90 days trading horizon Alandsbanken Abp A is expected to generate 0.72 times more return on investment than Finnair Oyj. However, Alandsbanken Abp A is 1.4 times less risky than Finnair Oyj. It trades about 0.03 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.09 per unit of risk. If you would invest 3,184 in Alandsbanken Abp A on August 29, 2024 and sell it today you would earn a total of 256.00 from holding Alandsbanken Abp A or generate 8.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alandsbanken Abp A vs. Finnair Oyj
Performance |
| Timeline |
| Alandsbanken Abp A |
| Finnair Oyj |
Alandsbanken Abp and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alandsbanken Abp and Finnair Oyj
The main advantage of trading using opposite Alandsbanken Abp and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alandsbanken Abp 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.| Alandsbanken Abp vs. Alandsbanken Abp B | Alandsbanken Abp vs. CapMan Oyj B | Alandsbanken Abp vs. Tokmanni Group Oyj | Alandsbanken Abp vs. Oma Saastopankki Oyj |
| Finnair Oyj vs. Telefonaktiebolaget LM Ericsson | Finnair Oyj vs. SSAB AB ser | Finnair Oyj vs. SSAB AB ser | Finnair Oyj vs. Telia Company AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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