Correlation Between Sappi and Klabin Sa
Can any of the company-specific risk be diversified away by investing in both Sappi and Klabin 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 Sappi and Klabin Sa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sappi Ltd ADR and Klabin Sa A, you can compare the effects of market volatilities on Sappi and Klabin 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 Sappi with a short position of Klabin Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sappi and Klabin Sa.
Diversification Opportunities for Sappi and Klabin Sa
Significant diversification
The 3 months correlation between Sappi and Klabin is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Sappi Ltd ADR and Klabin Sa A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klabin Sa A and Sappi 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 Sappi Ltd ADR are associated (or correlated) with Klabin Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klabin Sa A has no effect on the direction of Sappi i.e., Sappi and Klabin Sa go up and down completely randomly.
Pair Corralation between Sappi and Klabin Sa
Assuming the 90 days horizon Sappi Ltd ADR is expected to generate 0.82 times more return on investment than Klabin Sa. However, Sappi Ltd ADR is 1.21 times less risky than Klabin Sa. It trades about 0.08 of its potential returns per unit of risk. Klabin Sa A is currently generating about 0.03 per unit of risk. If you would invest 268.00 in Sappi Ltd ADR on August 25, 2024 and sell it today you would earn a total of 33.00 from holding Sappi Ltd ADR or generate 12.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 9.83% |
| Values | Daily Returns |
Sappi Ltd ADR vs. Klabin Sa A
Performance |
| Timeline |
| Sappi Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Klabin Sa A |
Sappi and Klabin Sa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sappi and Klabin Sa
The main advantage of trading using opposite Sappi and Klabin Sa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sappi position performs unexpectedly, Klabin 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 Klabin Sa will offset losses from the drop in Klabin Sa's long position.| Sappi vs. Nine Dragons Paper | Sappi vs. Nine Dragons Paper | Sappi vs. Mondi PLC ADR | Sappi vs. Klabin Sa A |
| Klabin Sa vs. Mondi PLC ADR | Klabin Sa vs. Suzano Papel e | Klabin Sa vs. Nine Dragons Paper | Klabin Sa vs. Nine Dragons Paper |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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