Correlation Between Finnair Oyj and Sampo Oyj

Can any of the company-specific risk be diversified away by investing in both Finnair Oyj and Sampo 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 Sampo 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 Sampo Oyj A, you can compare the effects of market volatilities on Finnair Oyj and Sampo 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 Sampo Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finnair Oyj and Sampo Oyj.

Diversification Opportunities for Finnair Oyj and Sampo Oyj

0.92

Correlation Coefficient

Finnair Oyj  Sampo Oyj

Almost no diversification

The 3 months correlation between Finnair and Sampo is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Sampo Oyj A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sampo Oyj A 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 Sampo Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sampo Oyj A has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Sampo Oyj go up and down completely randomly.

Pair Corralation between Finnair Oyj and Sampo Oyj

Assuming the 90 days trading horizon Finnair Oyj is expected to generate 3.55 times more return on investment than Sampo Oyj. However, Finnair Oyj is 3.55 times more volatile than Sampo Oyj A. It trades about 0.22 of its potential returns per unit of risk. Sampo Oyj A is currently generating about 0.19 per unit of risk. If you would invest  217.00  in Finnair Oyj on December 30, 2024 and sell it today you would earn a total of  126.00  from holding Finnair Oyj or generate 58.06% return on investment over 90 days.

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

Finnair Oyj  vs.  Sampo Oyj A

Finnair Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finnair Oyj are ranked lower than 17 (%) 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.

Sampo Oyj A

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sampo Oyj A are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, Sampo Oyj may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Finnair Oyj and Sampo Oyj

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

The idea behind Finnair Oyj and Sampo Oyj A 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.