Correlation Between Mirvac and Unit

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

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

Diversification Opportunities for Mirvac and Unit

-0.51

Correlation Coefficient

Mirvac  Unit

Excellent diversification

The 3 months correlation between Mirvac and Unit is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mirvac Group and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit and Mirvac 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 Mirvac Group are associated (or correlated) with Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Mirvac i.e., Mirvac and Unit go up and down completely randomly.

Pair Corralation between Mirvac and Unit

Assuming the 90 days horizon Mirvac Group is expected to under-perform the Unit. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mirvac Group is 7.04 times less risky than Unit. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Unit Corporation is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  45.00  in Unit Corporation on November 28, 2024 and sell it today you would earn a total of  5.00  from holding Unit Corporation or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.11%
Values	Daily Returns

Mirvac Group  vs.  Unit Corp.

Mirvac Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mirvac Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Unit

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unit showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mirvac and Unit

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

The idea behind Mirvac Group and Unit Corporation 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.