Correlation Between Exel Composites and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Exel Composites 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 Exel Composites and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exel Composites Oyj and UPM Kymmene Oyj, you can compare the effects of market volatilities on Exel Composites 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 Exel Composites with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exel Composites and UPM Kymmene.
Diversification Opportunities for Exel Composites and UPM Kymmene
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Exel and UPM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Exel Composites 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 Exel Composites 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 Exel Composites 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 Exel Composites i.e., Exel Composites and UPM Kymmene go up and down completely randomly.
Pair Corralation between Exel Composites and UPM Kymmene
Assuming the 90 days trading horizon Exel Composites Oyj is expected to under-perform the UPM Kymmene. In addition to that, Exel Composites is 1.69 times more volatile than UPM Kymmene Oyj. It trades about -0.56 of its total potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.32 per unit of volatility. If you would invest 2,770 in UPM Kymmene Oyj on August 30, 2024 and sell it today you would lose (269.00) from holding UPM Kymmene Oyj or give up 9.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Exel Composites Oyj vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Exel Composites Oyj |
| UPM Kymmene Oyj |
Exel Composites and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exel Composites and UPM Kymmene
The main advantage of trading using opposite Exel Composites and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exel Composites 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.| Exel Composites vs. Telefonaktiebolaget LM Ericsson | Exel Composites vs. SSAB AB ser | Exel Composites vs. SSAB AB ser | Exel Composites vs. Telia Company AB |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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