Correlation Between Unity Software and JD

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

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

Diversification Opportunities for Unity Software and JD

0.62

Correlation Coefficient

Unity Software  JD

Poor diversification

The 3 months correlation between Unity and JD is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and JD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Inc 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 JD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Inc has no effect on the direction of Unity Software i.e., Unity Software and JD go up and down completely randomly.

Pair Corralation between Unity Software and JD

Assuming the 90 days trading horizon Unity Software is expected to generate 1.03 times more return on investment than JD. However, Unity Software is 1.03 times more volatile than JD Inc. It trades about 0.2 of its potential returns per unit of risk. JD Inc is currently generating about 0.19 per unit of risk. If you would invest  453.00  in Unity Software on September 4, 2024 and sell it today you would earn a total of  278.00  from holding Unity Software or generate 61.37% return on investment over 90 days.

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

Unity Software  vs.  JD Inc

Unity Software

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Unity Software sustained solid returns over the last few months and may actually be approaching a breakup point.

JD Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JD Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, JD sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and JD

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

The idea behind Unity Software and JD Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.