Correlation Between UPM Kymmene and GLT Old

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

Diversification Opportunities for UPM Kymmene and GLT Old

-0.35

Correlation Coefficient

UPM Kymmene  GLT Old

Very good diversification

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

Pair Corralation between UPM Kymmene and GLT Old

If you would invest  2,764  in UPM Kymmene Oyj on October 10, 2024 and sell it today you would earn a total of  78.00  from holding UPM Kymmene Oyj or generate 2.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.56%
Values	Daily Returns

UPM Kymmene Oyj  vs.  GLT Old

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.

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.

Pair Trading with UPM Kymmene and GLT Old

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

The idea behind UPM Kymmene Oyj and GLT Old 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.

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 Anywhere module to track or share privately all of your investments from the convenience of any device.