Correlation Between UPM Kymmene and Viafin Service

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

Diversification Opportunities for UPM Kymmene and Viafin Service

0.0

Correlation Coefficient

UPM Kymmene  Viafin Service

Pay attention - limited upside

The 3 months correlation between UPM and Viafin is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Viafin Service Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viafin Service 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 Viafin Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viafin Service Oyj has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Viafin Service go up and down completely randomly.

Pair Corralation between UPM Kymmene and Viafin Service

If you would invest  2,680  in UPM Kymmene Oyj on October 7, 2024 and sell it today you would earn a total of  6.00  from holding UPM Kymmene Oyj or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

UPM Kymmene Oyj  vs.  Viafin Service Oyj

UPM Kymmene Oyj

Risk-Adjusted Performance

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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 inconsistent performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Viafin Service Oyj

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Viafin Service Oyj has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Viafin Service is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with UPM Kymmene and Viafin Service

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

The idea behind UPM Kymmene Oyj and Viafin Service 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.