Correlation Between Unity Software and United Lithium

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

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

Diversification Opportunities for Unity Software and United Lithium

-0.43

Correlation Coefficient

Unity Software  United Lithium

Very good diversification

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

Pair Corralation between Unity Software and United Lithium

Taking into account the 90-day investment horizon Unity Software is expected to generate 0.34 times more return on investment than United Lithium. However, Unity Software is 2.93 times less risky than United Lithium. It trades about 0.12 of its potential returns per unit of risk. United Lithium Corp is currently generating about 0.03 per unit of risk. If you would invest  1,640  in Unity Software on September 12, 2024 and sell it today you would earn a total of  1,000.00  from holding Unity Software or generate 60.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.2%
Values	Daily Returns

Unity Software  vs.  United Lithium Corp

Unity Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 12 (%) 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.

United Lithium Corp

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Unity Software and United Lithium

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

The idea behind Unity Software and United Lithium Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.