Correlation Between Finnair Oyj and Griffon

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

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

Diversification Opportunities for Finnair Oyj and Griffon

-0.81

Correlation Coefficient

Finnair Oyj  Griffon

Pay attention - limited upside

The 3 months correlation between Finnair and Griffon is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Griffon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Griffon 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 Griffon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Griffon has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Griffon go up and down completely randomly.

Pair Corralation between Finnair Oyj and Griffon

Assuming the 90 days horizon Finnair Oyj is expected to under-perform the Griffon. But the pink sheet apears to be less risky and, when comparing its historical volatility, Finnair Oyj is 1.23 times less risky than Griffon. The pink sheet trades about -0.02 of its potential returns per unit of risk. The Griffon is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  6,270  in Griffon on October 3, 2024 and sell it today you would earn a total of  857.00  from holding Griffon or generate 13.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

Finnair Oyj  vs.  Griffon

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 nearly stable basic indicators, Finnair Oyj is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Griffon

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Griffon are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Griffon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Finnair Oyj and Griffon

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

The idea behind Finnair Oyj and Griffon 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.