Correlation Between UPM Kymmene and Cargotec Oyj
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and Cargotec Oyj 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 Cargotec Oyj 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 Cargotec Oyj, you can compare the effects of market volatilities on UPM Kymmene and Cargotec Oyj 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 Cargotec Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Cargotec Oyj.
Diversification Opportunities for UPM Kymmene and Cargotec Oyj
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between UPM and Cargotec is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Cargotec Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cargotec Oyj 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 Cargotec Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cargotec Oyj has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Cargotec Oyj go up and down completely randomly.
Pair Corralation between UPM Kymmene and Cargotec Oyj
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to under-perform the Cargotec Oyj. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.46 times less risky than Cargotec Oyj. The stock trades about -0.25 of its potential returns per unit of risk. The Cargotec Oyj is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 5,558 in Cargotec Oyj on September 1, 2024 and sell it today you would lose (296.00) from holding Cargotec Oyj or give up 5.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Cargotec Oyj
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Cargotec Oyj |
UPM Kymmene and Cargotec Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and Cargotec Oyj
The main advantage of trading using opposite UPM Kymmene and Cargotec Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, Cargotec Oyj 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 Cargotec Oyj will offset losses from the drop in Cargotec Oyj's long position.| UPM Kymmene vs. Sampo Oyj A | UPM Kymmene vs. Fortum Oyj | UPM Kymmene vs. Nordea Bank Abp | UPM Kymmene vs. Stora Enso Oyj |
| Cargotec Oyj vs. Admicom Oyj | Cargotec Oyj vs. Talenom Oyj | Cargotec Oyj vs. Vincit Group Oyj | Cargotec Oyj vs. Harvia Oyj |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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