Correlation Between Cargotec Oyj and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Cargotec Oyj 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 Cargotec Oyj and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cargotec Oyj and UPM Kymmene Oyj, you can compare the effects of market volatilities on Cargotec Oyj 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 Cargotec Oyj with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargotec Oyj and UPM Kymmene.
Diversification Opportunities for Cargotec Oyj and UPM Kymmene
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cargotec and UPM is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cargotec Oyj 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 Cargotec 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 Cargotec Oyj 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 Cargotec Oyj i.e., Cargotec Oyj and UPM Kymmene go up and down completely randomly.
Pair Corralation between Cargotec Oyj and UPM Kymmene
Assuming the 90 days trading horizon Cargotec Oyj is expected to generate 1.46 times more return on investment than UPM Kymmene. However, Cargotec Oyj is 1.46 times more volatile than UPM Kymmene Oyj. It trades about -0.11 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.25 per unit of risk. If you would invest 5,558 in Cargotec Oyj on September 1, 2024 and sell it today you would lose (296.00) from holding Cargotec Oyj or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Cargotec Oyj vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Cargotec Oyj |
| UPM Kymmene Oyj |
Cargotec Oyj and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cargotec Oyj and UPM Kymmene
The main advantage of trading using opposite Cargotec Oyj and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cargotec Oyj 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.| Cargotec Oyj vs. Admicom Oyj | Cargotec Oyj vs. Talenom Oyj | Cargotec Oyj vs. Vincit Group Oyj | Cargotec Oyj vs. Harvia Oyj |
| UPM Kymmene vs. Sampo Oyj A | UPM Kymmene vs. Fortum Oyj | UPM Kymmene vs. Nordea Bank Abp | UPM Kymmene vs. Stora Enso Oyj |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Commodity Directory Find actively traded commodities issued by global exchanges |