Correlation Between Mitsubishi Chemical and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Mitsubishi Chemical 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 Mitsubishi Chemical and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mitsubishi Chemical Holdings and UPM Kymmene Oyj, you can compare the effects of market volatilities on Mitsubishi Chemical 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 Mitsubishi Chemical with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitsubishi Chemical and UPM Kymmene.
Diversification Opportunities for Mitsubishi Chemical and UPM Kymmene
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mitsubishi and UPM is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Mitsubishi Chemical Holdings 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 Mitsubishi Chemical 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 Mitsubishi Chemical Holdings 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 Mitsubishi Chemical i.e., Mitsubishi Chemical and UPM Kymmene go up and down completely randomly.
Pair Corralation between Mitsubishi Chemical and UPM Kymmene
Assuming the 90 days horizon Mitsubishi Chemical Holdings is expected to under-perform the UPM Kymmene. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mitsubishi Chemical Holdings is 2.44 times less risky than UPM Kymmene. The pink sheet trades about -0.09 of its potential returns per unit of risk. The UPM Kymmene Oyj is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 2,786 in UPM Kymmene Oyj on October 12, 2024 and sell it today you would lose (82.00) from holding UPM Kymmene Oyj or give up 2.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mitsubishi Chemical Holdings vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Mitsubishi Chemical |
| UPM Kymmene Oyj |
Mitsubishi Chemical and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mitsubishi Chemical and UPM Kymmene
The main advantage of trading using opposite Mitsubishi Chemical and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mitsubishi Chemical 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.| Mitsubishi Chemical vs. Sumitomo Chemical Co | Mitsubishi Chemical vs. Asahi Kaisei Corp | Mitsubishi Chemical vs. Nitto Denko Corp | Mitsubishi Chemical vs. Shin Etsu Chemical Co |
| UPM Kymmene vs. Clearwater Paper | UPM Kymmene vs. Suzano Papel e | UPM Kymmene vs. UPM Kymmene Oyj | UPM Kymmene vs. BASF SE NA |
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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