Correlation Between Nine Dragons and UPM Kymmene
Can any of the company-specific risk be diversified away by investing in both Nine Dragons 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 Nine Dragons and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Dragons Paper and UPM Kymmene Oyj, you can compare the effects of market volatilities on Nine Dragons 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 Nine Dragons with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and UPM Kymmene.
Diversification Opportunities for Nine Dragons and UPM Kymmene
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nine and UPM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper 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 Nine Dragons 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 Nine Dragons Paper 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 Nine Dragons i.e., Nine Dragons and UPM Kymmene go up and down completely randomly.
Pair Corralation between Nine Dragons and UPM Kymmene
Assuming the 90 days horizon Nine Dragons Paper is expected to generate 3.06 times more return on investment than UPM Kymmene. However, Nine Dragons is 3.06 times more volatile than UPM Kymmene Oyj. It trades about 0.0 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about 0.0 per unit of risk. If you would invest 1,283 in Nine Dragons Paper on September 12, 2024 and sell it today you would lose (401.00) from holding Nine Dragons Paper or give up 31.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. UPM Kymmene Oyj
Performance |
| Timeline |
| Nine Dragons Paper |
| UPM Kymmene Oyj |
Nine Dragons and UPM Kymmene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and UPM Kymmene
The main advantage of trading using opposite Nine Dragons and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons 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.| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Nine Dragons Paper | Nine Dragons vs. Klabin Sa A |
| UPM Kymmene vs. Canfor Pulp Products | UPM Kymmene vs. Mondi PLC ADR | UPM Kymmene vs. Nine Dragons Paper | UPM Kymmene vs. Sylvamo Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |