Correlation Between Applied DB and Unimit Engineering

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

By analyzing existing cross correlation between Applied DB Public and Unimit Engineering Public, you can compare the effects of market volatilities on Applied DB and Unimit Engineering 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 Applied DB with a short position of Unimit Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied DB and Unimit Engineering.

Diversification Opportunities for Applied DB and Unimit Engineering

0.59

Correlation Coefficient

Applied DB  Unimit Engineering

Very weak diversification

The 3 months correlation between Applied and Unimit is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Applied DB Public and Unimit Engineering Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unimit Engineering Public and Applied DB 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 Applied DB Public are associated (or correlated) with Unimit Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unimit Engineering Public has no effect on the direction of Applied DB i.e., Applied DB and Unimit Engineering go up and down completely randomly.

Pair Corralation between Applied DB and Unimit Engineering

Assuming the 90 days trading horizon Applied DB is expected to generate 1.01 times less return on investment than Unimit Engineering. In addition to that, Applied DB is 1.0 times more volatile than Unimit Engineering Public. It trades about 0.04 of its total potential returns per unit of risk. Unimit Engineering Public is currently generating about 0.04 per unit of volatility. If you would invest  135.00  in Unimit Engineering Public on October 21, 2024 and sell it today you would lose (31.00) from holding Unimit Engineering Public or give up 22.96% of portfolio value over 90 days.

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

Applied DB Public  vs.  Unimit Engineering Public

Applied DB Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Applied DB Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Unimit Engineering Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unimit Engineering Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Applied DB and Unimit Engineering

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

The idea behind Applied DB Public and Unimit Engineering Public 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.