Correlation Between ATT and Unicycive Therapeutics

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

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

Diversification Opportunities for ATT and Unicycive Therapeutics

0.84

Correlation Coefficient

ATT  Unicycive Therapeutics

Very poor diversification

The 3 months correlation between ATT and Unicycive is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Unicycive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unicycive Therapeutics and ATT 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 ATT Inc are associated (or correlated) with Unicycive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unicycive Therapeutics has no effect on the direction of ATT i.e., ATT and Unicycive Therapeutics go up and down completely randomly.

Pair Corralation between ATT and Unicycive Therapeutics

Taking into account the 90-day investment horizon ATT Inc is expected to generate 0.19 times more return on investment than Unicycive Therapeutics. However, ATT Inc is 5.25 times less risky than Unicycive Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Unicycive Therapeutics is currently generating about 0.02 per unit of risk. If you would invest  1,580  in ATT Inc on September 24, 2024 and sell it today you would earn a total of  695.00  from holding ATT Inc or generate 43.99% return on investment over 90 days.

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

ATT Inc  vs.  Unicycive Therapeutics

ATT Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unicycive Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unicycive Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unicycive Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ATT and Unicycive Therapeutics

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

The idea behind ATT Inc and Unicycive Therapeutics 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.