Correlation Between Finnair Oyj and Tamboran Resources

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

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

Diversification Opportunities for Finnair Oyj and Tamboran Resources

0.32

Correlation Coefficient

Finnair Oyj  Tamboran Resources

Weak diversification

The 3 months correlation between Finnair and Tamboran is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Finnair Oyj and Tamboran Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamboran Resources 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 Tamboran Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamboran Resources has no effect on the direction of Finnair Oyj i.e., Finnair Oyj and Tamboran Resources go up and down completely randomly.

Pair Corralation between Finnair Oyj and Tamboran Resources

Assuming the 90 days horizon Finnair Oyj is expected to generate 0.73 times more return on investment than Tamboran Resources. However, Finnair Oyj is 1.38 times less risky than Tamboran Resources. It trades about 0.27 of its potential returns per unit of risk. Tamboran Resources is currently generating about 0.12 per unit of risk. If you would invest  235.00  in Finnair Oyj on December 29, 2024 and sell it today you would earn a total of  164.00  from holding Finnair Oyj or generate 69.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Finnair Oyj  vs.  Tamboran Resources

Finnair Oyj

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Finnair Oyj are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Finnair Oyj reported solid returns over the last few months and may actually be approaching a breakup point.

Tamboran Resources

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tamboran Resources are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Tamboran Resources displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finnair Oyj and Tamboran Resources

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

The idea behind Finnair Oyj and Tamboran Resources 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.