Correlation Between A1MT34 and Unity Software

Can any of the company-specific risk be diversified away by investing in both A1MT34 and Unity Software 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 A1MT34 and Unity Software into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A1MT34 and Unity Software, you can compare the effects of market volatilities on A1MT34 and Unity Software 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 A1MT34 with a short position of Unity Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of A1MT34 and Unity Software.

Diversification Opportunities for A1MT34 and Unity Software

-0.29

Correlation Coefficient

A1MT34  Unity Software

Very good diversification

The 3 months correlation between A1MT34 and Unity is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding A1MT34 and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and A1MT34 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 A1MT34 are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of A1MT34 i.e., A1MT34 and Unity Software go up and down completely randomly.

Pair Corralation between A1MT34 and Unity Software

Assuming the 90 days trading horizon A1MT34 is expected to generate 0.76 times more return on investment than Unity Software. However, A1MT34 is 1.31 times less risky than Unity Software. It trades about 0.05 of its potential returns per unit of risk. Unity Software is currently generating about -0.01 per unit of risk. If you would invest  7,514  in A1MT34 on September 24, 2024 and sell it today you would earn a total of  2,486  from holding A1MT34 or generate 33.08% return on investment over 90 days.

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

A1MT34  vs.  Unity Software

A1MT34

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A1MT34 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, A1MT34 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Unity Software

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 3 (%) 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.

Pair Trading with A1MT34 and Unity Software

The main advantage of trading using opposite A1MT34 and Unity Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A1MT34 position performs unexpectedly, Unity Software 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 Unity Software will offset losses from the drop in Unity Software's long position.

The idea behind A1MT34 and Unity Software 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 Global Correlations module to find global opportunities by holding instruments from different markets.