Correlation Between PLAYTIKA HOLDING and UPM Kymmene

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

By analyzing existing cross correlation between PLAYTIKA HOLDING DL 01 and UPM Kymmene Oyj, you can compare the effects of market volatilities on PLAYTIKA HOLDING 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 PLAYTIKA HOLDING with a short position of UPM Kymmene. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYTIKA HOLDING and UPM Kymmene.

Diversification Opportunities for PLAYTIKA HOLDING and UPM Kymmene

-0.85

Correlation Coefficient

PLAYTIKA HOLDING  UPM Kymmene

Pay attention - limited upside

The 3 months correlation between PLAYTIKA and UPM is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding PLAYTIKA HOLDING DL 01 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 PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 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 PLAYTIKA HOLDING i.e., PLAYTIKA HOLDING and UPM Kymmene go up and down completely randomly.

Pair Corralation between PLAYTIKA HOLDING and UPM Kymmene

Assuming the 90 days horizon PLAYTIKA HOLDING DL 01 is expected to generate 1.57 times more return on investment than UPM Kymmene. However, PLAYTIKA HOLDING is 1.57 times more volatile than UPM Kymmene Oyj. It trades about 0.02 of its potential returns per unit of risk. UPM Kymmene Oyj is currently generating about -0.12 per unit of risk. If you would invest  705.00  in PLAYTIKA HOLDING DL 01 on September 19, 2024 and sell it today you would earn a total of  5.00  from holding PLAYTIKA HOLDING DL 01 or generate 0.71% return on investment over 90 days.

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

PLAYTIKA HOLDING DL 01  vs.  UPM Kymmene Oyj

PLAYTIKA HOLDING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYTIKA HOLDING DL 01 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PLAYTIKA HOLDING is not utilizing all of its potentials. The newest 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 unsteady 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 PLAYTIKA HOLDING and UPM Kymmene

The main advantage of trading using opposite PLAYTIKA HOLDING and UPM Kymmene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PLAYTIKA HOLDING 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 PLAYTIKA HOLDING DL 01 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.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.