Correlation Between Holmen AB and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Holmen AB 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 Holmen AB and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB and UPM Kymmene Oyj, you can compare the effects of market volatilities on Holmen AB 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 Holmen AB with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and UPM Kymmene.
Diversification Opportunities for Holmen AB and UPM Kymmene
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Holmen and UPM is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB 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 Holmen AB 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 Holmen AB 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 Holmen AB i.e., Holmen AB and UPM Kymmene go up and down completely randomly.
Pair Corralation between Holmen AB and UPM Kymmene
Assuming the 90 days trading horizon Holmen AB is expected to generate 1.24 times more return on investment than UPM Kymmene. However, Holmen AB is 1.24 times more volatile than UPM Kymmene Oyj. It trades about 0.03 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.03 per unit of risk. If you would invest 2,878 in Holmen AB on September 2, 2024 and sell it today you would earn a total of 618.00 from holding Holmen AB or generate 21.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Holmen AB |
| UPM Kymmene Oyj |
Holmen AB and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and UPM Kymmene
The main advantage of trading using opposite Holmen AB and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB 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.| Holmen AB vs. MCEWEN MINING INC | Holmen AB vs. GEELY AUTOMOBILE | Holmen AB vs. X FAB Silicon Foundries | Holmen AB vs. AECOM TECHNOLOGY |
| UPM Kymmene vs. TITAN MACHINERY | UPM Kymmene vs. Broadwind | UPM Kymmene vs. KAUFMAN ET BROAD | UPM Kymmene vs. Nishi Nippon Railroad Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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