Correlation Between UPM-Kymmene Oyj and Suzano Papel

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

Diversification Opportunities for UPM-Kymmene Oyj and Suzano Papel

-0.14

Correlation Coefficient

UPM-Kymmene Oyj  Suzano Papel

Good diversification

The 3 months correlation between UPM-Kymmene and Suzano is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Suzano Papel e in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzano Papel e and UPM-Kymmene Oyj 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 Suzano Papel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzano Papel e has no effect on the direction of UPM-Kymmene Oyj i.e., UPM-Kymmene Oyj and Suzano Papel go up and down completely randomly.

Pair Corralation between UPM-Kymmene Oyj and Suzano Papel

Assuming the 90 days horizon UPM Kymmene Oyj is expected to generate 1.32 times more return on investment than Suzano Papel. However, UPM-Kymmene Oyj is 1.32 times more volatile than Suzano Papel e. It trades about 0.02 of its potential returns per unit of risk. Suzano Papel e is currently generating about -0.11 per unit of risk. 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

UPM Kymmene Oyj  vs.  Suzano Papel e

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.

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.

Pair Trading with UPM-Kymmene Oyj and Suzano Papel

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

The idea behind UPM Kymmene Oyj and Suzano Papel e 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.