Correlation Between Sapiens International and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Sapiens International 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 Sapiens International and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sapiens International and Finnair Oyj, you can compare the effects of market volatilities on Sapiens International 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 Sapiens International with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and Finnair Oyj.
Diversification Opportunities for Sapiens International and Finnair Oyj
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sapiens and Finnair is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Sapiens International 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 Sapiens International 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 Sapiens International i.e., Sapiens International and Finnair Oyj go up and down completely randomly.
Pair Corralation between Sapiens International and Finnair Oyj
Given the investment horizon of 90 days Sapiens International is expected to generate 14.97 times less return on investment than Finnair Oyj. But when comparing it to its historical volatility, Sapiens International is 11.0 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 600.00 in Finnair Oyj on September 4, 2024 and sell it today you would lose (375.00) from holding Finnair Oyj or give up 62.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Sapiens International vs. Finnair Oyj
Performance |
| Timeline |
| Sapiens International |
| Finnair Oyj |
Sapiens International and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sapiens International and Finnair Oyj
The main advantage of trading using opposite Sapiens International and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International 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.| Sapiens International vs. PROS Holdings | Sapiens International vs. Meridianlink | Sapiens International vs. Enfusion | Sapiens International vs. PDF Solutions |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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