Correlation Between Unity Software and SKC

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

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

Diversification Opportunities for Unity Software and SKC

-0.14

Correlation Coefficient

Unity Software  SKC

Good diversification

The 3 months correlation between Unity and SKC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and SKC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKC Co and Unity Software 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 Unity Software are associated (or correlated) with SKC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKC Co has no effect on the direction of Unity Software i.e., Unity Software and SKC go up and down completely randomly.

Pair Corralation between Unity Software and SKC

Taking into account the 90-day investment horizon Unity Software is expected to generate 4.03 times less return on investment than SKC. In addition to that, Unity Software is 1.22 times more volatile than SKC Co. It trades about 0.01 of its total potential returns per unit of risk. SKC Co is currently generating about 0.04 per unit of volatility. If you would invest  10,690,000  in SKC Co on December 27, 2024 and sell it today you would earn a total of  680,000  from holding SKC Co or generate 6.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.08%
Values	Daily Returns

Unity Software  vs.  SKC Co

Unity Software

Risk-Adjusted Performance

Weak

Over the last 90 days Unity Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Unity Software is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SKC Co

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SKC Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SKC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and SKC

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

The idea behind Unity Software and SKC Co 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 Stocks Directory module to find actively traded stocks across global markets.