Correlation Between UPM-Kymmene Oyj and Sappi
Can any of the company-specific risk be diversified away by investing in both UPM-Kymmene Oyj and Sappi 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 Sappi 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 Sappi Ltd ADR, you can compare the effects of market volatilities on UPM-Kymmene Oyj and Sappi 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 Sappi. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM-Kymmene Oyj and Sappi.
Diversification Opportunities for UPM-Kymmene Oyj and Sappi
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between UPM-Kymmene and Sappi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Sappi Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sappi Ltd ADR 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 Sappi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sappi Ltd ADR has no effect on the direction of UPM-Kymmene Oyj i.e., UPM-Kymmene Oyj and Sappi go up and down completely randomly.
Pair Corralation between UPM-Kymmene Oyj and Sappi
If you would invest 2,763 in UPM Kymmene Oyj on November 1, 2024 and sell it today you would earn a total of 151.00 from holding UPM Kymmene Oyj or generate 5.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 5.26% |
| Values | Daily Returns |
UPM Kymmene Oyj vs. Sappi Ltd ADR
Performance |
| Timeline |
| UPM Kymmene Oyj |
| Sappi Ltd ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
UPM-Kymmene Oyj and Sappi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UPM-Kymmene Oyj and Sappi
The main advantage of trading using opposite UPM-Kymmene Oyj and Sappi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM-Kymmene Oyj position performs unexpectedly, Sappi 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 Sappi will offset losses from the drop in Sappi'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 |
| Sappi vs. Nine Dragons Paper | Sappi vs. Nine Dragons Paper | Sappi vs. Mondi PLC ADR | Sappi 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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