Correlation Between UPM Kymmene and CapitaLand Investment
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and CapitaLand Investment 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 UPM Kymmene and CapitaLand Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UPM Kymmene Oyj and CapitaLand Investment Limited, you can compare the effects of market volatilities on UPM Kymmene and CapitaLand Investment 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 UPM Kymmene with a short position of CapitaLand Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and CapitaLand Investment.
Diversification Opportunities for UPM Kymmene and CapitaLand Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UPM and CapitaLand is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and CapitaLand Investment Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CapitaLand Investment and UPM Kymmene 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 UPM Kymmene Oyj are associated (or correlated) with CapitaLand Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CapitaLand Investment has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and CapitaLand Investment go up and down completely randomly.
Pair Corralation between UPM Kymmene and CapitaLand Investment
Assuming the 90 days horizon UPM Kymmene Oyj is expected to under-perform the CapitaLand Investment. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.15 times less risky than CapitaLand Investment. The stock trades about -0.16 of its potential returns per unit of risk. The CapitaLand Investment Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 188.00 in CapitaLand Investment Limited on September 4, 2024 and sell it today you would earn a total of 2.00 from holding CapitaLand Investment Limited or generate 1.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. CapitaLand Investment Limited
Performance |
| Timeline |
| UPM Kymmene Oyj |
| CapitaLand Investment |
UPM Kymmene and CapitaLand Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and CapitaLand Investment
The main advantage of trading using opposite UPM Kymmene and CapitaLand Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, CapitaLand Investment 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 CapitaLand Investment will offset losses from the drop in CapitaLand Investment's long position.| UPM Kymmene vs. CapitaLand Investment Limited | UPM Kymmene vs. HK Electric Investments | UPM Kymmene vs. Apollo Investment Corp | UPM Kymmene vs. ECHO INVESTMENT ZY |
| CapitaLand Investment vs. DXC Technology Co | CapitaLand Investment vs. Vishay Intertechnology | CapitaLand Investment vs. JSC Halyk bank | CapitaLand Investment vs. Micron Technology |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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