Correlation Between UPM Kymmene and Terveystalo
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and Terveystalo 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 Terveystalo 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 Terveystalo Oy, you can compare the effects of market volatilities on UPM Kymmene and Terveystalo 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 Terveystalo. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Terveystalo.
Diversification Opportunities for UPM Kymmene and Terveystalo
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UPM and Terveystalo is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Terveystalo Oy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terveystalo Oy 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 Terveystalo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terveystalo Oy has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Terveystalo go up and down completely randomly.
Pair Corralation between UPM Kymmene and Terveystalo
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to under-perform the Terveystalo. But the stock apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.09 times less risky than Terveystalo. The stock trades about -0.05 of its potential returns per unit of risk. The Terveystalo Oy is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 732.00 in Terveystalo Oy on September 14, 2024 and sell it today you would earn a total of 336.00 from holding Terveystalo Oy or generate 45.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Terveystalo Oy
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Terveystalo Oy |
UPM Kymmene and Terveystalo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and Terveystalo
The main advantage of trading using opposite UPM Kymmene and Terveystalo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, Terveystalo 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 Terveystalo will offset losses from the drop in Terveystalo's long position.| UPM Kymmene vs. Stora Enso Oyj | UPM Kymmene vs. Valmet Oyj | UPM Kymmene vs. Wartsila Oyj Abp | UPM Kymmene vs. Outokumpu Oyj |
| Terveystalo vs. Sampo Oyj A | Terveystalo vs. UPM Kymmene Oyj | Terveystalo vs. Wartsila Oyj Abp | Terveystalo vs. Elisa 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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