Correlation Between UPM Kymmene and Glatfelter

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

Diversification Opportunities for UPM Kymmene and Glatfelter

-0.23

Correlation Coefficient

UPM Kymmene  Glatfelter

Very good diversification

The 3 months correlation between UPM and Glatfelter is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Glatfelter in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glatfelter 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 Glatfelter. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glatfelter has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Glatfelter go up and down completely randomly.

Pair Corralation between UPM Kymmene and Glatfelter

If you would invest  2,673  in UPM Kymmene Oyj on September 14, 2024 and sell it today you would earn a total of  76.00  from holding UPM Kymmene Oyj or generate 2.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

UPM Kymmene Oyj  vs.  Glatfelter

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 unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Glatfelter

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Glatfelter has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Glatfelter is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with UPM Kymmene and Glatfelter

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

The idea behind UPM Kymmene Oyj and Glatfelter 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.