Correlation Between Generation Capital and Unicorn Technologies

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

By analyzing existing cross correlation between Generation Capital and Unicorn Technologies , you can compare the effects of market volatilities on Generation Capital and Unicorn Technologies 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 Generation Capital with a short position of Unicorn Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Capital and Unicorn Technologies.

Diversification Opportunities for Generation Capital and Unicorn Technologies

0.01

Correlation Coefficient

Generation Capital  Unicorn Technologies

Significant diversification

The 3 months correlation between Generation and Unicorn is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Generation Capital and Unicorn Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicorn Technologies and Generation Capital 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 Generation Capital are associated (or correlated) with Unicorn Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicorn Technologies has no effect on the direction of Generation Capital i.e., Generation Capital and Unicorn Technologies go up and down completely randomly.

Pair Corralation between Generation Capital and Unicorn Technologies

Assuming the 90 days trading horizon Generation Capital is expected to generate 0.92 times more return on investment than Unicorn Technologies. However, Generation Capital is 1.09 times less risky than Unicorn Technologies. It trades about 0.06 of its potential returns per unit of risk. Unicorn Technologies is currently generating about -0.01 per unit of risk. If you would invest  7,700  in Generation Capital on November 29, 2024 and sell it today you would earn a total of  400.00  from holding Generation Capital or generate 5.19% return on investment over 90 days.

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

Generation Capital  vs.  Unicorn Technologies

Generation Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Capital are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Generation Capital may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Unicorn Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unicorn Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Unicorn Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Generation Capital and Unicorn Technologies

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

The idea behind Generation Capital and Unicorn Technologies 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.