Correlation Between Finnair Oyj and RLX Technology
Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and RLX Technology 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 RLX Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finnair Oyj and RLX Technology, you can compare the effects of market volatilities on Finnair Oyj and RLX Technology 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 RLX Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and RLX Technology.
Diversification Opportunities for Finnair Oyj and RLX Technology
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finnair and RLX is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and RLX Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RLX Technology 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 RLX Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RLX Technology has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and RLX Technology go up and down completely randomly.
Pair Corralation between Finnair Oyj and RLX Technology
Assuming the 90 days horizon Finnair Oyj is expected to generate 5.21 times more return on investment than RLX Technology. However, Finnair Oyj is 5.21 times more volatile than RLX Technology. It trades about 0.03 of its potential returns per unit of risk. RLX Technology is currently generating about 0.0 per unit of risk. If you would invest 749.00 in Finnair Oyj on September 2, 2024 and sell it today you would lose (516.00) from holding Finnair Oyj or give up 68.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Finnair Oyj vs. RLX Technology
Performance |
| Timeline |
| Finnair Oyj |
| RLX Technology |
Finnair Oyj and RLX Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finnair Oyj and RLX Technology
The main advantage of trading using opposite Finnair Oyj and RLX Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, RLX Technology 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 RLX Technology will offset losses from the drop in RLX Technology's long position.| Finnair Oyj vs. easyJet plc | Finnair Oyj vs. Norse Atlantic ASA | Finnair Oyj vs. Air New Zealand | Finnair Oyj vs. Air China Limited |
| RLX Technology vs. Green Globe International | RLX Technology vs. Kaival Brands Innovations | RLX Technology vs. Greenlane Holdings | RLX Technology vs. 22nd Century Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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