Correlation Between Unity Software and Air Products

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

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

Diversification Opportunities for Unity Software and Air Products

0.58

Correlation Coefficient

Unity Software  Air Products

Very weak diversification

The 3 months correlation between Unity and Air is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Air Products and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Products 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 Air Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Products has no effect on the direction of Unity Software i.e., Unity Software and Air Products go up and down completely randomly.

Pair Corralation between Unity Software and Air Products

Taking into account the 90-day investment horizon Unity Software is expected to under-perform the Air Products. In addition to that, Unity Software is 1.96 times more volatile than Air Products and. It trades about -0.02 of its total potential returns per unit of risk. Air Products and is currently generating about 0.07 per unit of volatility. If you would invest  23,577  in Air Products and on September 3, 2024 and sell it today you would earn a total of  7,953  from holding Air Products and or generate 33.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Unity Software  vs.  Air Products and

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.

Air Products

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Products and are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Air Products reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Air Products

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

The idea behind Unity Software and Air Products and 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.