Correlation Between Monogram Orthopaedics and Finnair Oyj

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

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

Diversification Opportunities for Monogram Orthopaedics and Finnair Oyj

0.3

Correlation Coefficient

Monogram Orthopaedics  Finnair Oyj

Weak diversification

The 3 months correlation between Monogram and Finnair is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Monogram Orthopaedics Common and Finnair Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finnair Oyj and Monogram Orthopaedics 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 Monogram Orthopaedics Common are associated (or correlated) with Finnair Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finnair Oyj has no effect on the direction of Monogram Orthopaedics i.e., Monogram Orthopaedics and Finnair Oyj go up and down completely randomly.

Pair Corralation between Monogram Orthopaedics and Finnair Oyj

Given the investment horizon of 90 days Monogram Orthopaedics Common is expected to generate 2.73 times more return on investment than Finnair Oyj. However, Monogram Orthopaedics is 2.73 times more volatile than Finnair Oyj. It trades about 0.06 of its potential returns per unit of risk. Finnair Oyj is currently generating about -0.22 per unit of risk. If you would invest  250.00  in Monogram Orthopaedics Common on October 22, 2024 and sell it today you would earn a total of  7.00  from holding Monogram Orthopaedics Common or generate 2.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.0%
Values	Daily Returns

Monogram Orthopaedics Common  vs.  Finnair Oyj

Monogram Orthopaedics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monogram Orthopaedics Common are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Monogram Orthopaedics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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.

Pair Trading with Monogram Orthopaedics and Finnair Oyj

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

The idea behind Monogram Orthopaedics Common and Finnair 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..