Correlation Between Suzano Papel and UPM-Kymmene Oyj

Can any of the company-specific risk be diversified away by investing in both Suzano Papel 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 Suzano Papel 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 Suzano Papel e and UPM Kymmene Oyj, you can compare the effects of market volatilities on Suzano Papel 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 Suzano Papel with a short position of UPM-Kymmene Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzano Papel and UPM-Kymmene Oyj.

Diversification Opportunities for Suzano Papel and UPM-Kymmene Oyj

-0.14

Correlation Coefficient

Suzano Papel  UPM-Kymmene Oyj

Good diversification

The 3 months correlation between Suzano and UPM-Kymmene is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Suzano Papel e 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 Suzano Papel 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 Suzano Papel e 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 Suzano Papel i.e., Suzano Papel and UPM-Kymmene Oyj go up and down completely randomly.

Pair Corralation between Suzano Papel and UPM-Kymmene Oyj

Considering the 90-day investment horizon Suzano Papel e is expected to under-perform the UPM-Kymmene Oyj. But the stock apears to be less risky and, when comparing its historical volatility, Suzano Papel e is 1.32 times less risky than UPM-Kymmene Oyj. The stock trades about -0.11 of its potential returns per unit of risk. The UPM Kymmene Oyj is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,757  in UPM Kymmene Oyj on December 30, 2024 and sell it today you would earn a total of  44.00  from holding UPM Kymmene Oyj or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Suzano Papel e  vs.  UPM Kymmene Oyj

Suzano Papel e

Risk-Adjusted Performance

Very Weak

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

UPM Kymmene Oyj

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in UPM Kymmene Oyj are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong primary indicators, UPM-Kymmene Oyj is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Suzano Papel and UPM-Kymmene Oyj

The main advantage of trading using opposite Suzano Papel and UPM-Kymmene Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzano Papel 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 Suzano Papel e 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.