Correlation Between UPM Kymmene and SSAB AB
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and SSAB AB 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 SSAB AB 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 SSAB AB ser, you can compare the effects of market volatilities on UPM Kymmene and SSAB AB 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 SSAB AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and SSAB AB.
Diversification Opportunities for UPM Kymmene and SSAB AB
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between UPM and SSAB is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and SSAB AB ser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSAB AB ser 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 SSAB AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSAB AB ser has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and SSAB AB go up and down completely randomly.
Pair Corralation between UPM Kymmene and SSAB AB
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to under-perform the SSAB AB. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.46 times less risky than SSAB AB. The stock trades about -0.17 of its potential returns per unit of risk. The SSAB AB ser is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 532.00 in SSAB AB ser on September 1, 2024 and sell it today you would lose (103.00) from holding SSAB AB ser or give up 19.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. SSAB AB ser
Performance |
| Timeline |
| UPM Kymmene Oyj |
| SSAB AB ser |
UPM Kymmene and SSAB AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and SSAB AB
The main advantage of trading using opposite UPM Kymmene and SSAB AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, SSAB AB 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 SSAB AB will offset losses from the drop in SSAB AB'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 |
| SSAB AB vs. Outokumpu Oyj | SSAB AB vs. Nordea Bank Abp | SSAB AB vs. Telia Company AB | SSAB AB vs. Wartsila Oyj Abp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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