Correlation Between UPM Kymmene and Oma Saastopankki
Can any of the company-specific risk be diversified away by investing in both UPM Kymmene and Oma Saastopankki 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 Oma Saastopankki 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 Oma Saastopankki Oyj, you can compare the effects of market volatilities on UPM Kymmene and Oma Saastopankki 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 Oma Saastopankki. Check out your portfolio center. Please also check ongoing floating volatility patterns of UPM Kymmene and Oma Saastopankki.
Diversification Opportunities for UPM Kymmene and Oma Saastopankki
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between UPM and Oma is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Oma Saastopankki Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oma Saastopankki Oyj 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 Oma Saastopankki. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oma Saastopankki Oyj has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Oma Saastopankki go up and down completely randomly.
Pair Corralation between UPM Kymmene and Oma Saastopankki
Assuming the 90 days trading horizon UPM Kymmene Oyj is expected to generate 0.62 times more return on investment than Oma Saastopankki. However, UPM Kymmene Oyj is 1.62 times less risky than Oma Saastopankki. It trades about -0.08 of its potential returns per unit of risk. Oma Saastopankki Oyj is currently generating about -0.13 per unit of risk. If you would invest 2,851 in UPM Kymmene Oyj on September 6, 2024 and sell it today you would lose (240.00) from holding UPM Kymmene Oyj or give up 8.42% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
UPM Kymmene Oyj vs. Oma Saastopankki Oyj
Performance |
Timeline |
UPM Kymmene Oyj |
Oma Saastopankki Oyj |
UPM Kymmene and Oma Saastopankki Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with UPM Kymmene and Oma Saastopankki
The main advantage of trading using opposite UPM Kymmene and Oma Saastopankki positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UPM Kymmene position performs unexpectedly, Oma Saastopankki 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 Oma Saastopankki will offset losses from the drop in Oma Saastopankki's long position.UPM Kymmene vs. Sampo Oyj A | UPM Kymmene vs. Fortum Oyj | UPM Kymmene vs. Nordea Bank Abp | UPM Kymmene vs. Stora Enso Oyj |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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