Correlation Between UPM-Kymmene Oyj and Suzano SA
Can any of the company-specific risk be diversified away by investing in both UPM-Kymmene Oyj and Suzano SA 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 Oyj and Suzano SA 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 Suzano SA, you can compare the effects of market volatilities on UPM-Kymmene Oyj and Suzano SA 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 Oyj with a short position of Suzano SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM-Kymmene Oyj and Suzano SA.
Diversification Opportunities for UPM-Kymmene Oyj and Suzano SA
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between UPM-Kymmene and Suzano is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Suzano SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano SA and UPM-Kymmene Oyj 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 Suzano SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano SA has no effect on the direction of UPM-Kymmene Oyj i.e., UPM-Kymmene Oyj and Suzano SA go up and down completely randomly.
Pair Corralation between UPM-Kymmene Oyj and Suzano SA
Assuming the 90 days horizon UPM Kymmene Oyj is expected to under-perform the Suzano SA. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.31 times less risky than Suzano SA. The stock trades about -0.03 of its potential returns per unit of risk. The Suzano SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 901.00 in Suzano SA on August 27, 2024 and sell it today you would earn a total of 94.00 from holding Suzano SA or generate 10.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Suzano SA
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Suzano SA |
UPM-Kymmene Oyj and Suzano SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM-Kymmene Oyj and Suzano SA
The main advantage of trading using opposite UPM-Kymmene Oyj and Suzano SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM-Kymmene Oyj position performs unexpectedly, Suzano SA 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 Suzano SA will offset losses from the drop in Suzano SA's long position.| UPM-Kymmene Oyj vs. STORA ENSO OYJ | UPM-Kymmene Oyj vs. Stora Enso Oyj | UPM-Kymmene Oyj vs. Suzano SA | UPM-Kymmene Oyj vs. Suzano SA |
| Suzano SA vs. MSAD INSURANCE | Suzano SA vs. Japan Post Insurance | Suzano SA vs. United Insurance Holdings | Suzano SA vs. Goosehead Insurance |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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