Correlation Between Synthomer Plc and Finnair Oyj
Can any of the company-specific risk be diversified away by investing in both Synthomer Plc 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 Synthomer Plc and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synthomer plc and Finnair Oyj, you can compare the effects of market volatilities on Synthomer Plc 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 Synthomer Plc with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synthomer Plc and Finnair Oyj.
Diversification Opportunities for Synthomer Plc and Finnair Oyj
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Synthomer and Finnair is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Synthomer plc and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Synthomer Plc 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 Synthomer plc 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 Synthomer Plc i.e., Synthomer Plc and Finnair Oyj go up and down completely randomly.
Pair Corralation between Synthomer Plc and Finnair Oyj
Assuming the 90 days trading horizon Synthomer plc is expected to under-perform the Finnair Oyj. In addition to that, Synthomer Plc is 1.26 times more volatile than Finnair Oyj. It trades about -0.3 of its total potential returns per unit of risk. Finnair Oyj is currently generating about -0.11 per unit of volatility. If you would invest 243.00 in Finnair Oyj on October 11, 2024 and sell it today you would lose (13.00) from holding Finnair Oyj or give up 5.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Synthomer plc vs. Finnair Oyj
Performance |
| Timeline |
| Synthomer plc |
| Finnair Oyj |
Synthomer Plc and Finnair Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synthomer Plc and Finnair Oyj
The main advantage of trading using opposite Synthomer Plc and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synthomer Plc 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.| Synthomer Plc vs. Sligro Food Group | Synthomer Plc vs. Dairy Farm International | Synthomer Plc vs. Ebro Foods | Synthomer Plc vs. URU Metals |
| Finnair Oyj vs. Synthomer plc | Finnair Oyj vs. Mobius Investment Trust | Finnair Oyj vs. Home Depot | Finnair Oyj vs. Diversified Energy |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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