Correlation Between Prosiebensat and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Prosiebensat and UPM Kymmene 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 Prosiebensat and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosiebensat 1 Media and UPM Kymmene Oyj, you can compare the effects of market volatilities on Prosiebensat and UPM Kymmene 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 Prosiebensat with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosiebensat and UPM Kymmene.
Diversification Opportunities for Prosiebensat and UPM Kymmene
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prosiebensat and UPM is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Prosiebensat 1 Media and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj and Prosiebensat 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 Prosiebensat 1 Media are associated (or correlated) with UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of Prosiebensat i.e., Prosiebensat and UPM Kymmene go up and down completely randomly.
Pair Corralation between Prosiebensat and UPM Kymmene
Assuming the 90 days trading horizon Prosiebensat 1 Media is expected to under-perform the UPM Kymmene. In addition to that, Prosiebensat is 2.09 times more volatile than UPM Kymmene Oyj. It trades about -0.37 of its total potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.38 per unit of volatility. If you would invest 2,842 in UPM Kymmene Oyj on August 28, 2024 and sell it today you would lose (264.00) from holding UPM Kymmene Oyj or give up 9.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosiebensat 1 Media vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Prosiebensat 1 Media |
| UPM Kymmene Oyj |
Prosiebensat and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosiebensat and UPM Kymmene
The main advantage of trading using opposite Prosiebensat and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosiebensat position performs unexpectedly, UPM Kymmene 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 UPM Kymmene will offset losses from the drop in UPM Kymmene's long position.| Prosiebensat vs. Samsung Electronics Co | Prosiebensat vs. Samsung Electronics Co | Prosiebensat vs. Hyundai Motor | Prosiebensat vs. Toyota Motor Corp |
| UPM Kymmene vs. Home Depot | UPM Kymmene vs. Intermediate Capital Group | UPM Kymmene vs. Prosiebensat 1 Media | UPM Kymmene vs. Zinc Media Group |
Check out your portfolio center.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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