Correlation Between Unity Software and Wijaya Karya

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

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

Diversification Opportunities for Unity Software and Wijaya Karya

-0.04

Correlation Coefficient

Unity Software  Wijaya Karya

Good diversification

The 3 months correlation between Unity and Wijaya is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Wijaya Karya Bangunan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wijaya Karya Bangunan 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 Wijaya Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wijaya Karya Bangunan has no effect on the direction of Unity Software i.e., Unity Software and Wijaya Karya go up and down completely randomly.

Pair Corralation between Unity Software and Wijaya Karya

Taking into account the 90-day investment horizon Unity Software is expected to generate 1.15 times more return on investment than Wijaya Karya. However, Unity Software is 1.15 times more volatile than Wijaya Karya Bangunan. It trades about 0.01 of its potential returns per unit of risk. Wijaya Karya Bangunan is currently generating about -0.02 per unit of risk. If you would invest  2,251  in Unity Software on December 28, 2024 and sell it today you would lose (93.00) from holding Unity Software or give up 4.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Unity Software  vs.  Wijaya Karya Bangunan

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.

Wijaya Karya Bangunan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wijaya Karya Bangunan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Wijaya Karya is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Unity Software and Wijaya Karya

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

The idea behind Unity Software and Wijaya Karya Bangunan 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.