Correlation Between UPM Kymmene and Konecranes Plc
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and Konecranes Plc 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 Konecranes Plc 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 Konecranes Plc, you can compare the effects of market volatilities on UPM Kymmene and Konecranes Plc 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 Konecranes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Konecranes Plc.
Diversification Opportunities for UPM Kymmene and Konecranes Plc
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UPM and Konecranes is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Konecranes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konecranes Plc 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 Konecranes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konecranes Plc has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Konecranes Plc go up and down completely randomly.
Pair Corralation between UPM Kymmene and Konecranes Plc
Assuming the 90 days trading horizon UPM Kymmene is expected to generate 8.61 times less return on investment than Konecranes Plc. But when comparing it to its historical volatility, UPM Kymmene Oyj is 1.38 times less risky than Konecranes Plc. It trades about 0.01 of its potential returns per unit of risk. Konecranes Plc is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,423 in Konecranes Plc on November 3, 2024 and sell it today you would earn a total of 1,407 from holding Konecranes Plc or generate 31.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Konecranes Plc
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Konecranes Plc |
UPM Kymmene and Konecranes Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and Konecranes Plc
The main advantage of trading using opposite UPM Kymmene and Konecranes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, Konecranes Plc 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 Konecranes Plc will offset losses from the drop in Konecranes Plc'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 |
| Konecranes Plc vs. Cargotec Oyj | Konecranes Plc vs. Sampo Oyj A | Konecranes Plc vs. Wartsila Oyj Abp | Konecranes Plc vs. Valmet 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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