Correlation Between Unity Software and Shinsegae Engineering

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

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

Diversification Opportunities for Unity Software and Shinsegae Engineering

0.54

Correlation Coefficient

Unity Software  Shinsegae Engineering

Very weak diversification

The 3 months correlation between Unity and Shinsegae is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Shinsegae Engineering Construc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Engineering 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 Shinsegae Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Engineering has no effect on the direction of Unity Software i.e., Unity Software and Shinsegae Engineering go up and down completely randomly.

Pair Corralation between Unity Software and Shinsegae Engineering

Taking into account the 90-day investment horizon Unity Software is expected to generate 1.13 times less return on investment than Shinsegae Engineering. In addition to that, Unity Software is 1.44 times more volatile than Shinsegae Engineering Construction. It trades about 0.08 of its total potential returns per unit of risk. Shinsegae Engineering Construction is currently generating about 0.14 per unit of volatility. If you would invest  1,205,000  in Shinsegae Engineering Construction on September 3, 2024 and sell it today you would earn a total of  598,000  from holding Shinsegae Engineering Construction or generate 49.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.8%
Values	Daily Returns

Unity Software  vs.  Shinsegae Engineering Construc

Unity Software

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shinsegae Engineering

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shinsegae Engineering Construction are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shinsegae Engineering sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Shinsegae Engineering

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

The idea behind Unity Software and Shinsegae Engineering Construction 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.