Correlation Between UPM Kymmene and WITHSECURE
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and WITHSECURE 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 WITHSECURE 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 WITHSECURE, you can compare the effects of market volatilities on UPM Kymmene and WITHSECURE 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 WITHSECURE. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and WITHSECURE.
Diversification Opportunities for UPM Kymmene and WITHSECURE
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between UPM and WITHSECURE is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and WITHSECURE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WITHSECURE 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 WITHSECURE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WITHSECURE has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and WITHSECURE go up and down completely randomly.
Pair Corralation between UPM Kymmene and WITHSECURE
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to generate 0.66 times more return on investment than WITHSECURE. However, UPM Kymmene Oyj is 1.51 times less risky than WITHSECURE. It trades about -0.17 of its potential returns per unit of risk. WITHSECURE is currently generating about -0.14 per unit of risk. If you would invest 3,398 in UPM Kymmene Oyj on September 2, 2024 and sell it today you would lose (908.00) from holding UPM Kymmene Oyj or give up 26.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. WITHSECURE
Performance |
| Timeline |
| UPM Kymmene Oyj |
| WITHSECURE |
UPM Kymmene and WITHSECURE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and WITHSECURE
The main advantage of trading using opposite UPM Kymmene and WITHSECURE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, WITHSECURE 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 WITHSECURE will offset losses from the drop in WITHSECURE'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 |
| WITHSECURE vs. F SECURE OYJ | WITHSECURE vs. Qt Group Oyj | WITHSECURE vs. Tokmanni Group Oyj | WITHSECURE 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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