Correlation Between OMX Helsinki and Genfit

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

By analyzing existing cross correlation between OMX Helsinki BenchmarkGI and Genfit, you can compare the effects of market volatilities on OMX Helsinki and Genfit 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 OMX Helsinki with a short position of Genfit. Check out your portfolio center. Please also check ongoing floating volatility patterns of OMX Helsinki and Genfit.

Diversification Opportunities for OMX Helsinki and Genfit

-0.15

Correlation Coefficient

OMX Helsinki  Genfit

Good diversification

The 3 months correlation between OMX and Genfit is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding OMX Helsinki BenchmarkGI and Genfit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genfit and OMX Helsinki 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 OMX Helsinki BenchmarkGI are associated (or correlated) with Genfit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genfit has no effect on the direction of OMX Helsinki i.e., OMX Helsinki and Genfit go up and down completely randomly.

Pair Corralation between OMX Helsinki and Genfit

Assuming the 90 days trading horizon OMX Helsinki BenchmarkGI is expected to generate 0.24 times more return on investment than Genfit. However, OMX Helsinki BenchmarkGI is 4.16 times less risky than Genfit. It trades about 0.23 of its potential returns per unit of risk. Genfit is currently generating about 0.0 per unit of risk. If you would invest  13,792  in OMX Helsinki BenchmarkGI on December 27, 2024 and sell it today you would earn a total of  1,644  from holding OMX Helsinki BenchmarkGI or generate 11.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

OMX Helsinki BenchmarkGI  vs.  Genfit

Pair Trading with OMX Helsinki and Genfit

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

The idea behind OMX Helsinki BenchmarkGI and Genfit 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.