Correlation Between Neometals and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Neometals 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 Neometals and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and Finnair Oyj, you can compare the effects of market volatilities on Neometals 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 Neometals with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and Finnair Oyj.
Diversification Opportunities for Neometals and Finnair Oyj
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neometals and Finnair is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Neometals 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 Neometals 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 Neometals i.e., Neometals and Finnair Oyj go up and down completely randomly.
Pair Corralation between Neometals and Finnair Oyj
Assuming the 90 days trading horizon Neometals is expected to under-perform the Finnair Oyj. In addition to that, Neometals is 1.43 times more volatile than Finnair Oyj. It trades about -0.14 of its total potential returns per unit of risk. Finnair Oyj is currently generating about 0.15 per unit of volatility. If you would invest 222.00 in Finnair Oyj on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Finnair Oyj or generate 6.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neometals vs. Finnair Oyj
Performance |
| Timeline |
| Neometals |
| Finnair Oyj |
Neometals and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and Finnair Oyj
The main advantage of trading using opposite Neometals and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals 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.| Neometals vs. DFS Furniture PLC | Neometals vs. MyHealthChecked Plc | Neometals vs. Bellevue Healthcare Trust | Neometals vs. Universal Health Services |
| Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Samsung Electronics Co | Finnair Oyj vs. Hyundai Motor | Finnair Oyj vs. Reliance Industries Ltd |
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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