Correlation Between UPM Kymmene and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene 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 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 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 with a short position of Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Canfor Pulp.
Diversification Opportunities for UPM Kymmene and Canfor Pulp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UPM and Canfor is 0.24. 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 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 i.e., UPM Kymmene and Canfor Pulp go up and down completely randomly.
Pair Corralation between UPM Kymmene and Canfor Pulp
Assuming the 90 days horizon UPM Kymmene Oyj is expected to generate 0.47 times more return on investment than Canfor Pulp. However, UPM Kymmene Oyj is 2.15 times less risky than Canfor Pulp. It trades about 0.0 of its potential returns per unit of risk. Canfor Pulp Products is currently generating about -0.06 per unit of risk. If you would invest 2,968 in UPM Kymmene Oyj on September 12, 2024 and sell it today you would lose (152.00) from holding UPM Kymmene Oyj or give up 5.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Canfor Pulp Products
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Canfor Pulp Products |
UPM Kymmene and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM Kymmene and Canfor Pulp
The main advantage of trading using opposite UPM Kymmene and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene 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 vs. Canfor Pulp Products | UPM Kymmene vs. Mondi PLC ADR | UPM Kymmene vs. Nine Dragons Paper | UPM Kymmene vs. Sylvamo Corp |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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