Correlation Between Unity Software and PagSeguro Digital

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

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

Diversification Opportunities for Unity Software and PagSeguro Digital

-0.46

Correlation Coefficient

Unity Software  PagSeguro Digital

Very good diversification

The 3 months correlation between Unity and PagSeguro is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and PagSeguro Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PagSeguro Digital 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 PagSeguro Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PagSeguro Digital has no effect on the direction of Unity Software i.e., Unity Software and PagSeguro Digital go up and down completely randomly.

Pair Corralation between Unity Software and PagSeguro Digital

Assuming the 90 days trading horizon Unity Software is expected to generate 1.41 times more return on investment than PagSeguro Digital. However, Unity Software is 1.41 times more volatile than PagSeguro Digital. It trades about 0.07 of its potential returns per unit of risk. PagSeguro Digital is currently generating about -0.06 per unit of risk. If you would invest  583.00  in Unity Software on October 24, 2024 and sell it today you would earn a total of  85.00  from holding Unity Software or generate 14.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Unity Software  vs.  PagSeguro Digital

Unity Software

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Unity Software sustained solid returns over the last few months and may actually be approaching a breakup point.

PagSeguro Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PagSeguro Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Unity Software and PagSeguro Digital

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

The idea behind Unity Software and PagSeguro Digital 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.