Correlation Between GLT Old and UPM Kymmene

Can any of the company-specific risk be diversified away by investing in both GLT Old and UPM Kymmene 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 GLT Old and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GLT Old and UPM Kymmene Oyj, you can compare the effects of market volatilities on GLT Old and UPM Kymmene 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 GLT Old with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of GLT Old and UPM Kymmene.

Diversification Opportunities for GLT Old and UPM Kymmene

-0.35

Correlation Coefficient

GLT Old  UPM Kymmene

Very good diversification

The 3 months correlation between GLT and UPM is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding GLT Old and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj and GLT Old 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 GLT Old are associated (or correlated) with UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of GLT Old i.e., GLT Old and UPM Kymmene go up and down completely randomly.

Pair Corralation between GLT Old and UPM Kymmene

If you would invest  2,832  in UPM Kymmene Oyj on October 10, 2024 and sell it today you would earn a total of  10.00  from holding UPM Kymmene Oyj or generate 0.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	5.0%
Values	Daily Returns

GLT Old  vs.  UPM Kymmene Oyj

GLT Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GLT Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UPM Kymmene Oyj

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UPM Kymmene Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with GLT Old and UPM Kymmene

The main advantage of trading using opposite GLT Old and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GLT Old position performs unexpectedly, UPM Kymmene 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 UPM Kymmene will offset losses from the drop in UPM Kymmene's long position.

The idea behind GLT Old and UPM Kymmene Oyj pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.