Correlation Between Unity Software and StateHouse Holdings

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

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

Diversification Opportunities for Unity Software and StateHouse Holdings

-0.43

Correlation Coefficient

Unity Software  StateHouse Holdings

Very good diversification

The 3 months correlation between Unity and StateHouse is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and StateHouse Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StateHouse Holdings 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 StateHouse Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StateHouse Holdings has no effect on the direction of Unity Software i.e., Unity Software and StateHouse Holdings go up and down completely randomly.

Pair Corralation between Unity Software and StateHouse Holdings

Taking into account the 90-day investment horizon Unity Software is expected to generate 192.21 times less return on investment than StateHouse Holdings. But when comparing it to its historical volatility, Unity Software is 15.52 times less risky than StateHouse Holdings. It trades about 0.01 of its potential returns per unit of risk. StateHouse Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12.00  in StateHouse Holdings on September 4, 2024 and sell it today you would lose (10.50) from holding StateHouse Holdings or give up 87.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Unity Software  vs.  StateHouse Holdings

Unity Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

StateHouse Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in StateHouse Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, StateHouse Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and StateHouse Holdings

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

The idea behind Unity Software and StateHouse Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..