Correlation Between Klabin Sa and Mercer International
Can any of the company-specific risk be diversified away by investing in both Klabin Sa and Mercer International 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 Klabin Sa and Mercer International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klabin Sa A and Mercer International, you can compare the effects of market volatilities on Klabin Sa and Mercer International 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 Klabin Sa with a short position of Mercer International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klabin Sa and Mercer International.
Diversification Opportunities for Klabin Sa and Mercer International
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Klabin and Mercer is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Klabin Sa A and Mercer International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercer International and Klabin Sa 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 Klabin Sa A are associated (or correlated) with Mercer International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercer International has no effect on the direction of Klabin Sa i.e., Klabin Sa and Mercer International go up and down completely randomly.
Pair Corralation between Klabin Sa and Mercer International
Assuming the 90 days horizon Klabin Sa A is expected to generate 1.65 times more return on investment than Mercer International. However, Klabin Sa is 1.65 times more volatile than Mercer International. It trades about 0.05 of its potential returns per unit of risk. Mercer International is currently generating about -0.16 per unit of risk. If you would invest 714.00 in Klabin Sa A on August 29, 2024 and sell it today you would earn a total of 20.00 from holding Klabin Sa A or generate 2.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klabin Sa A vs. Mercer International
Performance |
| Timeline |
| Klabin Sa A |
| Mercer International |
Klabin Sa and Mercer International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klabin Sa and Mercer International
The main advantage of trading using opposite Klabin Sa and Mercer International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klabin Sa position performs unexpectedly, Mercer International 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 Mercer International will offset losses from the drop in Mercer International's long position.| Klabin Sa vs. Mondi PLC ADR | Klabin Sa vs. Suzano Papel e | Klabin Sa vs. Nine Dragons Paper | Klabin Sa vs. Nine Dragons Paper |
| Mercer International vs. Sylvamo Corp | Mercer International vs. Suzano Papel e | Mercer International vs. UPM Kymmene Oyj | Mercer International vs. Clearwater Paper |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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