Correlation Between Unity Software and Pegasus Resources

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

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

Diversification Opportunities for Unity Software and Pegasus Resources

0.07

Correlation Coefficient

Unity Software  Pegasus Resources

Significant diversification

The 3 months correlation between Unity and Pegasus is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Pegasus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasus Resources 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 Pegasus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasus Resources has no effect on the direction of Unity Software i.e., Unity Software and Pegasus Resources go up and down completely randomly.

Pair Corralation between Unity Software and Pegasus Resources

Taking into account the 90-day investment horizon Unity Software is expected to generate 14.0 times less return on investment than Pegasus Resources. But when comparing it to its historical volatility, Unity Software is 3.75 times less risky than Pegasus Resources. It trades about 0.02 of its potential returns per unit of risk. Pegasus Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  9.90  in Pegasus Resources on December 27, 2024 and sell it today you would lose (4.05) from holding Pegasus Resources or give up 40.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Unity Software  vs.  Pegasus Resources

Unity Software

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pegasus Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Pegasus Resources reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Pegasus Resources

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

The idea behind Unity Software and Pegasus Resources 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.