Correlation Between UPM Kymmene and Dalata Hotel

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

Diversification Opportunities for UPM Kymmene and Dalata Hotel

0.0

Correlation Coefficient

UPM Kymmene  Dalata Hotel

Pay attention - limited upside

The 3 months correlation between UPM and Dalata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding UPM Kymmene Oyj and Dalata Hotel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalata Hotel Group 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 Dalata Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalata Hotel Group has no effect on the direction of UPM Kymmene i.e., UPM Kymmene and Dalata Hotel go up and down completely randomly.

Pair Corralation between UPM Kymmene and Dalata Hotel

If you would invest  413.00  in Dalata Hotel Group on September 26, 2024 and sell it today you would earn a total of  45.00  from holding Dalata Hotel Group or generate 10.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

UPM Kymmene Oyj  vs.  Dalata Hotel Group

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 nearly stable basic indicators, UPM Kymmene is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Dalata Hotel Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with UPM Kymmene and Dalata Hotel

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

The idea behind UPM Kymmene Oyj and Dalata Hotel Group 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.