Correlation Between Pardee Resources and Unit

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

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

Diversification Opportunities for Pardee Resources and Unit

0.66

Correlation Coefficient

Pardee Resources  Unit

Poor diversification

The 3 months correlation between Pardee and Unit is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pardee Resources Co and Unit Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unit and Pardee Resources 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 Pardee Resources Co are associated (or correlated) with Unit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unit has no effect on the direction of Pardee Resources i.e., Pardee Resources and Unit go up and down completely randomly.

Pair Corralation between Pardee Resources and Unit

Given the investment horizon of 90 days Pardee Resources is expected to generate 24.23 times less return on investment than Unit. But when comparing it to its historical volatility, Pardee Resources Co is 20.81 times less risky than Unit. It trades about 0.15 of its potential returns per unit of risk. Unit Corporation is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Unit Corporation on September 16, 2024 and sell it today you would earn a total of  30.00  from holding Unit Corporation or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	75.38%
Values	Daily Returns

Pardee Resources Co  vs.  Unit Corp.

Pardee Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pardee Resources Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating technical and fundamental indicators, Pardee Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Unit

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unit Corporation are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Unit showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pardee Resources and Unit

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

The idea behind Pardee Resources Co and Unit Corporation 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.