Correlation Between UPM-Kymmene Oyj and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both UPM-Kymmene Oyj and Canfor Pulp 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 Oyj and Canfor Pulp 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 Canfor Pulp Products, you can compare the effects of market volatilities on UPM-Kymmene Oyj and Canfor Pulp 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 Oyj with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM-Kymmene Oyj and Canfor Pulp.
Diversification Opportunities for UPM-Kymmene Oyj and Canfor Pulp
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between UPM-Kymmene and Canfor is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products and UPM-Kymmene Oyj 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 Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of UPM-Kymmene Oyj i.e., UPM-Kymmene Oyj and Canfor Pulp go up and down completely randomly.
Pair Corralation between UPM-Kymmene Oyj and Canfor Pulp
Assuming the 90 days horizon UPM Kymmene Oyj is expected to under-perform the Canfor Pulp. But the pink sheet apears to be less risky and, when comparing its historical volatility, UPM Kymmene Oyj is 1.54 times less risky than Canfor Pulp. The pink sheet trades about -0.37 of its potential returns per unit of risk. The Canfor Pulp Products is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Canfor Pulp Products on August 28, 2024 and sell it today you would lose (9.00) from holding Canfor Pulp Products or give up 12.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Canfor Pulp Products
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Canfor Pulp Products |
UPM-Kymmene Oyj and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM-Kymmene Oyj and Canfor Pulp
The main advantage of trading using opposite UPM-Kymmene Oyj and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM-Kymmene Oyj position performs unexpectedly, Canfor Pulp 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 Canfor Pulp will offset losses from the drop in Canfor Pulp's long position.| UPM-Kymmene Oyj vs. Mercer International | UPM-Kymmene Oyj vs. Sylvamo Corp | UPM-Kymmene Oyj vs. Suzano Papel e | UPM-Kymmene Oyj vs. Clearwater Paper |
| Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Mondi PLC ADR | Canfor Pulp vs. Klabin Sa A |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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