Correlation Between Holmen AB and UPM-Kymmene Oyj

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

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

Diversification Opportunities for Holmen AB and UPM-Kymmene Oyj

0.0

Correlation Coefficient

Holmen AB  UPM-Kymmene Oyj

Pay attention - limited upside

The 3 months correlation between Holmen and UPM-Kymmene is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB ADR 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 Holmen AB 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 Holmen AB ADR are associated (or correlated) with UPM-Kymmene Oyj. 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 Holmen AB i.e., Holmen AB and UPM-Kymmene Oyj go up and down completely randomly.

Pair Corralation between Holmen AB and UPM-Kymmene Oyj

If you would invest  2,662  in UPM Kymmene Oyj on December 19, 2024 and sell it today you would earn a total of  359.00  from holding UPM Kymmene Oyj or generate 13.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Holmen AB ADR  vs.  UPM Kymmene Oyj

Holmen AB ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Holmen AB ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Holmen AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UPM Kymmene Oyj

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UPM Kymmene Oyj are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady primary indicators, UPM-Kymmene Oyj showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Holmen AB and UPM-Kymmene Oyj

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

The idea behind Holmen AB ADR 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..