Correlation Between Unity Software and Concentric

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

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

Diversification Opportunities for Unity Software and Concentric

0.67

Correlation Coefficient

Unity Software  Concentric

Poor diversification

The 3 months correlation between Unity and Concentric is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Concentric AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentric AB 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 Concentric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concentric AB has no effect on the direction of Unity Software i.e., Unity Software and Concentric go up and down completely randomly.

Pair Corralation between Unity Software and Concentric

Taking into account the 90-day investment horizon Unity Software is expected to generate 3.64 times less return on investment than Concentric. In addition to that, Unity Software is 1.16 times more volatile than Concentric AB. It trades about 0.01 of its total potential returns per unit of risk. Concentric AB is currently generating about 0.02 per unit of volatility. If you would invest  19,542  in Concentric AB on September 4, 2024 and sell it today you would earn a total of  3,458  from holding Concentric AB or generate 17.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.17%
Values	Daily Returns

Unity Software  vs.  Concentric AB

Unity Software

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 14 (%) 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.

Concentric AB

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Concentric AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Concentric 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 Concentric

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

The idea behind Unity Software and Concentric AB 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.