Correlation Between UPM Kymmene and Oji Holdings
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and Oji Holdings 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 Oji Holdings 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 Oji Holdings, you can compare the effects of market volatilities on UPM Kymmene and Oji Holdings 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 Oji Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Oji Holdings.
Diversification Opportunities for UPM Kymmene and Oji Holdings
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPM and Oji is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Oji Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oji Holdings 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 Oji Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oji Holdings has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Oji Holdings go up and down completely randomly.
Pair Corralation between UPM Kymmene and Oji Holdings
Assuming the 90 days horizon UPM Kymmene Oyj is expected to under-perform the Oji Holdings. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.13 times less risky than Oji Holdings. The stock trades about -0.35 of its potential returns per unit of risk. The Oji Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 340.00 in Oji Holdings on August 31, 2024 and sell it today you would earn a total of 0.00 from holding Oji Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Oji Holdings
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Oji Holdings |
UPM Kymmene and Oji Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and Oji Holdings
The main advantage of trading using opposite UPM Kymmene and Oji Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, Oji Holdings 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 Oji Holdings will offset losses from the drop in Oji Holdings' long position.| UPM Kymmene vs. Suzano SA | UPM Kymmene vs. Suzano SA | UPM Kymmene vs. Holmen AB | UPM Kymmene vs. Nine Dragons Paper |
| Oji Holdings vs. Ultra Clean Holdings | Oji Holdings vs. Automatic Data Processing | Oji Holdings vs. Thai Beverage Public | Oji Holdings vs. TELES Informationstechnologien AG |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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