Correlation Between 05526DBJ3 and Finnair Oyj

Can any of the company-specific risk be diversified away by investing in both 05526DBJ3 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 05526DBJ3 and Finnair Oyj into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BAT CAPITAL P and Finnair Oyj, you can compare the effects of market volatilities on 05526DBJ3 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 05526DBJ3 with a short position of Finnair Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of 05526DBJ3 and Finnair Oyj.

Diversification Opportunities for 05526DBJ3 and Finnair Oyj

0.47

Correlation Coefficient

05526DBJ3  Finnair Oyj

Very weak diversification

The 3 months correlation between 05526DBJ3 and Finnair is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding BAT CAPITAL P and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and 05526DBJ3 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 BAT CAPITAL P 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 05526DBJ3 i.e., 05526DBJ3 and Finnair Oyj go up and down completely randomly.

Pair Corralation between 05526DBJ3 and Finnair Oyj

Assuming the 90 days trading horizon BAT CAPITAL P is expected to generate 0.23 times more return on investment than Finnair Oyj. However, BAT CAPITAL P is 4.44 times less risky than Finnair Oyj. It trades about -0.13 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.07 per unit of risk. If you would invest  9,782  in BAT CAPITAL P on September 12, 2024 and sell it today you would lose (347.00) from holding BAT CAPITAL P or give up 3.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.88%
Values	Daily Returns

BAT CAPITAL P  vs.  Finnair Oyj

BAT CAPITAL P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BAT CAPITAL P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 05526DBJ3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Finnair Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finnair Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with 05526DBJ3 and Finnair Oyj

The main advantage of trading using opposite 05526DBJ3 and Finnair Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 05526DBJ3 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.

The idea behind BAT CAPITAL P and Finnair Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.