Correlation Between PLAY2CHILL and UPM Kymmene

Can any of the company-specific risk be diversified away by investing in both PLAY2CHILL and UPM Kymmene 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 PLAY2CHILL and UPM Kymmene into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PLAY2CHILL SA ZY and UPM Kymmene Oyj, you can compare the effects of market volatilities on PLAY2CHILL and UPM Kymmene 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 PLAY2CHILL with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAY2CHILL and UPM Kymmene.

Diversification Opportunities for PLAY2CHILL and UPM Kymmene

-0.24

Correlation Coefficient

PLAY2CHILL  UPM Kymmene

Very good diversification

The 3 months correlation between PLAY2CHILL and UPM is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding PLAY2CHILL SA ZY and UPM Kymmene Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UPM Kymmene Oyj and PLAY2CHILL 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 PLAY2CHILL SA ZY are associated (or correlated) with UPM Kymmene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UPM Kymmene Oyj has no effect on the direction of PLAY2CHILL i.e., PLAY2CHILL and UPM Kymmene go up and down completely randomly.

Pair Corralation between PLAY2CHILL and UPM Kymmene

Assuming the 90 days horizon PLAY2CHILL SA ZY is expected to under-perform the UPM Kymmene. In addition to that, PLAY2CHILL is 2.05 times more volatile than UPM Kymmene Oyj. It trades about -0.29 of its total potential returns per unit of risk. UPM Kymmene Oyj is currently generating about 0.07 per unit of volatility. If you would invest  2,535  in UPM Kymmene Oyj on October 1, 2024 and sell it today you would earn a total of  38.00  from holding UPM Kymmene Oyj or generate 1.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PLAY2CHILL SA ZY  vs.  UPM Kymmene Oyj

PLAY2CHILL SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLAY2CHILL SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLAY2CHILL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PLAY2CHILL and UPM Kymmene

The main advantage of trading using opposite PLAY2CHILL and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAY2CHILL position performs unexpectedly, UPM Kymmene 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 UPM Kymmene will offset losses from the drop in UPM Kymmene's long position.

The idea behind PLAY2CHILL SA ZY and UPM Kymmene 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.