Correlation Between AcadeMedia and Unite Group

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

By analyzing existing cross correlation between AcadeMedia AB and Unite Group PLC, you can compare the effects of market volatilities on AcadeMedia and Unite Group 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 AcadeMedia with a short position of Unite Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AcadeMedia and Unite Group.

Diversification Opportunities for AcadeMedia and Unite Group

-0.37

Correlation Coefficient

AcadeMedia  Unite Group

Very good diversification

The 3 months correlation between AcadeMedia and Unite is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding AcadeMedia AB and Unite Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unite Group PLC and AcadeMedia 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 AcadeMedia AB are associated (or correlated) with Unite Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unite Group PLC has no effect on the direction of AcadeMedia i.e., AcadeMedia and Unite Group go up and down completely randomly.

Pair Corralation between AcadeMedia and Unite Group

Assuming the 90 days trading horizon AcadeMedia AB is expected to generate 1.43 times more return on investment than Unite Group. However, AcadeMedia is 1.43 times more volatile than Unite Group PLC. It trades about 0.08 of its potential returns per unit of risk. Unite Group PLC is currently generating about -0.22 per unit of risk. If you would invest  6,305  in AcadeMedia AB on October 11, 2024 and sell it today you would earn a total of  410.00  from holding AcadeMedia AB or generate 6.5% return on investment over 90 days.

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

AcadeMedia AB  vs.  Unite Group PLC

AcadeMedia AB

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AcadeMedia AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, AcadeMedia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Unite Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unite Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AcadeMedia and Unite Group

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

The idea behind AcadeMedia AB and Unite Group PLC 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.