Correlation Between Telefonaktiebolaget and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Telefonaktiebolaget 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 Telefonaktiebolaget and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telefonaktiebolaget LM Ericsson and Finnair Oyj, you can compare the effects of market volatilities on Telefonaktiebolaget 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 Telefonaktiebolaget with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telefonaktiebolaget and Finnair Oyj.
Diversification Opportunities for Telefonaktiebolaget and Finnair Oyj
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Telefonaktiebolaget and Finnair is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Telefonaktiebolaget LM Ericsso and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Telefonaktiebolaget 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 Telefonaktiebolaget LM Ericsson 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 Telefonaktiebolaget i.e., Telefonaktiebolaget and Finnair Oyj go up and down completely randomly.
Pair Corralation between Telefonaktiebolaget and Finnair Oyj
Assuming the 90 days trading horizon Telefonaktiebolaget is expected to generate 30.42 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Telefonaktiebolaget LM Ericsson is 4.77 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 0.36 of returns per unit of risk over similar time horizon. If you would invest 241.00 in Finnair Oyj on November 27, 2024 and sell it today you would earn a total of 93.00 from holding Finnair Oyj or generate 38.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telefonaktiebolaget LM Ericsso vs. Finnair Oyj
Performance |
| Timeline |
| Telefonaktiebolaget |
| Finnair Oyj |
Telefonaktiebolaget and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telefonaktiebolaget and Finnair Oyj
The main advantage of trading using opposite Telefonaktiebolaget and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telefonaktiebolaget 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.| Telefonaktiebolaget vs. Telia Company AB | Telefonaktiebolaget vs. SSAB AB ser | Telefonaktiebolaget vs. Kesko Oyj | Telefonaktiebolaget vs. Stora Enso Oyj |
| Finnair Oyj vs. Fortum Oyj | Finnair Oyj vs. Nordea Bank Abp | Finnair Oyj vs. Sampo Oyj A | Finnair Oyj vs. Neste Oil Oyj |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |