Correlation Between Finnair Oyj and AS Tallink

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

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

Diversification Opportunities for Finnair Oyj and AS Tallink

0.59

Correlation Coefficient

Finnair Oyj  AS Tallink

Very weak diversification

The 3 months correlation between Finnair and TALLINK is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and AS Tallink Grupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Tallink Grupp 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 AS Tallink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Tallink Grupp has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and AS Tallink go up and down completely randomly.

Pair Corralation between Finnair Oyj and AS Tallink

Assuming the 90 days trading horizon Finnair Oyj is expected to generate 2.71 times more return on investment than AS Tallink. However, Finnair Oyj is 2.71 times more volatile than AS Tallink Grupp. It trades about 0.04 of its potential returns per unit of risk. AS Tallink Grupp is currently generating about 0.01 per unit of risk. If you would invest  235.00  in Finnair Oyj on October 10, 2024 and sell it today you would earn a total of  3.00  from holding Finnair Oyj or generate 1.28% return on investment over 90 days.

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

Finnair Oyj  vs.  AS Tallink Grupp

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 fairly strong technical indicators, Finnair Oyj is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

AS Tallink Grupp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AS Tallink Grupp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, AS Tallink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Finnair Oyj and AS Tallink

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

The idea behind Finnair Oyj and AS Tallink Grupp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.