Correlation Between Unity Software and WOOLWORTHS

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

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

Diversification Opportunities for Unity Software and WOOLWORTHS

0.44

Correlation Coefficient

Unity Software  WOOLWORTHS

Very weak diversification

The 3 months correlation between Unity and WOOLWORTHS is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and WOOLWORTHS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOOLWORTHS 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 WOOLWORTHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOOLWORTHS has no effect on the direction of Unity Software i.e., Unity Software and WOOLWORTHS go up and down completely randomly.

Pair Corralation between Unity Software and WOOLWORTHS

Assuming the 90 days horizon Unity Software is expected to generate 3.54 times more return on investment than WOOLWORTHS. However, Unity Software is 3.54 times more volatile than WOOLWORTHS. It trades about 0.0 of its potential returns per unit of risk. WOOLWORTHS is currently generating about -0.01 per unit of risk. If you would invest  2,132  in Unity Software on December 22, 2024 and sell it today you would lose (167.00) from holding Unity Software or give up 7.83% of portfolio value over 90 days.

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

Unity Software  vs.  WOOLWORTHS

Unity Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unity Software has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Unity Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WOOLWORTHS

Risk-Adjusted Performance

Very Weak

Over the last 90 days WOOLWORTHS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, WOOLWORTHS is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Unity Software and WOOLWORTHS

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

The idea behind Unity Software and WOOLWORTHS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.