Correlation Between Finnair Oyj and GoldMining

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

By analyzing existing cross correlation between Finnair Oyj and GoldMining, you can compare the effects of market volatilities on Finnair Oyj and GoldMining 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 GoldMining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and GoldMining.

Diversification Opportunities for Finnair Oyj and GoldMining

0.15

Correlation Coefficient

Finnair Oyj  GoldMining

Average diversification

The 3 months correlation between Finnair and GoldMining is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and GoldMining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoldMining 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 GoldMining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoldMining has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and GoldMining go up and down completely randomly.

Pair Corralation between Finnair Oyj and GoldMining

Assuming the 90 days trading horizon Finnair Oyj is expected to under-perform the GoldMining. But the stock apears to be less risky and, when comparing its historical volatility, Finnair Oyj is 1.05 times less risky than GoldMining. The stock trades about -0.05 of its potential returns per unit of risk. The GoldMining is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  173.00  in GoldMining on October 11, 2024 and sell it today you would lose (56.00) from holding GoldMining or give up 32.37% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	38.1%
Values	Daily Returns

Finnair Oyj  vs.  GoldMining

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. In spite of comparatively stable basic indicators, Finnair Oyj is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

GoldMining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GoldMining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Finnair Oyj and GoldMining

The main advantage of trading using opposite Finnair Oyj and GoldMining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finnair Oyj position performs unexpectedly, GoldMining 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 GoldMining will offset losses from the drop in GoldMining's long position.

The idea behind Finnair Oyj and GoldMining 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.