Correlation Between UPM Kymmene and PunaMusta Media
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and PunaMusta Media 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 PunaMusta Media 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 PunaMusta Media Oyj, you can compare the effects of market volatilities on UPM Kymmene and PunaMusta Media 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 PunaMusta Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and PunaMusta Media.
Diversification Opportunities for UPM Kymmene and PunaMusta Media
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UPM and PunaMusta is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and PunaMusta Media Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PunaMusta Media 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 PunaMusta Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PunaMusta Media Oyj has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and PunaMusta Media go up and down completely randomly.
Pair Corralation between UPM Kymmene and PunaMusta Media
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to generate 0.54 times more return on investment than PunaMusta Media. However, UPM Kymmene Oyj is 1.84 times less risky than PunaMusta Media. It trades about -0.25 of its potential returns per unit of risk. PunaMusta Media Oyj is currently generating about -0.32 per unit of risk. If you would invest 2,693 in UPM Kymmene Oyj on September 1, 2024 and sell it today you would lose (203.00) from holding UPM Kymmene Oyj or give up 7.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 22.73% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. PunaMusta Media Oyj
Performance |
| Timeline |
| UPM Kymmene Oyj |
| PunaMusta Media Oyj |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
UPM Kymmene and PunaMusta Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and PunaMusta Media
The main advantage of trading using opposite UPM Kymmene and PunaMusta Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, PunaMusta Media 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 PunaMusta Media will offset losses from the drop in PunaMusta Media'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 |
| PunaMusta Media vs. Tokmanni Group Oyj | PunaMusta Media vs. Kemira Oyj | PunaMusta Media vs. Elisa Oyj | PunaMusta Media 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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