Correlation Between Finnair Oyj and Aspo Oyj

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

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

Diversification Opportunities for Finnair Oyj and Aspo Oyj

0.64

Correlation Coefficient

Finnair Oyj  Aspo Oyj

Poor diversification

The 3 months correlation between Finnair and Aspo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Aspo Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspo Oyj 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 Aspo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspo Oyj has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Aspo Oyj go up and down completely randomly.

Pair Corralation between Finnair Oyj and Aspo Oyj

Assuming the 90 days trading horizon Finnair Oyj is expected to generate 2.65 times more return on investment than Aspo Oyj. However, Finnair Oyj is 2.65 times more volatile than Aspo Oyj. It trades about 0.26 of its potential returns per unit of risk. Aspo Oyj is currently generating about 0.13 per unit of risk. If you would invest  219.00  in Finnair Oyj on December 23, 2024 and sell it today you would earn a total of  149.00  from holding Finnair Oyj or generate 68.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Finnair Oyj  vs.  Aspo Oyj

Finnair Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finnair Oyj are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Finnair Oyj demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Aspo Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aspo Oyj are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Aspo Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Finnair Oyj and Aspo Oyj

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

The idea behind Finnair Oyj and Aspo 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.