Correlation Between Unity Software and ISS AS

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

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

Diversification Opportunities for Unity Software and ISS AS

0.18

Correlation Coefficient

Unity Software  ISS AS

Average diversification

The 3 months correlation between Unity and ISS is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and ISS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISS AS 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 ISS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISS AS has no effect on the direction of Unity Software i.e., Unity Software and ISS AS go up and down completely randomly.

Pair Corralation between Unity Software and ISS AS

Taking into account the 90-day investment horizon Unity Software is expected to under-perform the ISS AS. In addition to that, Unity Software is 2.66 times more volatile than ISS AS. It trades about 0.0 of its total potential returns per unit of risk. ISS AS is currently generating about 0.18 per unit of volatility. If you would invest  13,240  in ISS AS on December 26, 2024 and sell it today you would earn a total of  3,170  from holding ISS AS or generate 23.94% return on investment over 90 days.

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

Unity Software  vs.  ISS AS

Unity Software

Risk-Adjusted Performance

Very 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.

ISS AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ISS AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ISS AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and ISS AS

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

The idea behind Unity Software and ISS AS 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.