Correlation Between Kesko Oyj and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Kesko 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 Kesko 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 Kesko Oyj and UPM Kymmene Oyj, you can compare the effects of market volatilities on Kesko 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 Kesko Oyj with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kesko Oyj and UPM Kymmene.
Diversification Opportunities for Kesko Oyj and UPM Kymmene
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kesko and UPM is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kesko 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 Kesko 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 Kesko 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 Kesko Oyj i.e., Kesko Oyj and UPM Kymmene go up and down completely randomly.
Pair Corralation between Kesko Oyj and UPM Kymmene
Assuming the 90 days trading horizon Kesko Oyj is expected to generate 1.04 times more return on investment than UPM Kymmene. However, Kesko Oyj is 1.04 times more volatile than UPM Kymmene Oyj. It trades about 0.06 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.15 per unit of risk. If you would invest 1,832 in Kesko Oyj on August 26, 2024 and sell it today you would earn a total of 74.00 from holding Kesko Oyj or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kesko Oyj vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Kesko Oyj |
| UPM Kymmene Oyj |
Kesko Oyj and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kesko Oyj and UPM Kymmene
The main advantage of trading using opposite Kesko Oyj and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kesko 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.| Kesko Oyj vs. Kesko Oyj | Kesko Oyj vs. Sampo Oyj A | Kesko Oyj vs. Tokmanni Group Oyj | Kesko Oyj vs. UPM Kymmene 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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