Correlation Between Aquagold International and Unity Bancorp

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

By analyzing existing cross correlation between Aquagold International and Unity Bancorp, you can compare the effects of market volatilities on Aquagold International and Unity Bancorp 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 Aquagold International with a short position of Unity Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and Unity Bancorp.

Diversification Opportunities for Aquagold International and Unity Bancorp

0.45

Correlation Coefficient

Aquagold International  Unity Bancorp

Very weak diversification

The 3 months correlation between Aquagold and Unity is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and Unity Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Bancorp and Aquagold International 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 Aquagold International are associated (or correlated) with Unity Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Bancorp has no effect on the direction of Aquagold International i.e., Aquagold International and Unity Bancorp go up and down completely randomly.

Pair Corralation between Aquagold International and Unity Bancorp

Given the investment horizon of 90 days Aquagold International is expected to under-perform the Unity Bancorp. In addition to that, Aquagold International is 2.8 times more volatile than Unity Bancorp. It trades about -0.12 of its total potential returns per unit of risk. Unity Bancorp is currently generating about -0.03 per unit of volatility. If you would invest  4,084  in Unity Bancorp on January 7, 2025 and sell it today you would lose (202.00) from holding Unity Bancorp or give up 4.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.92%
Values	Daily Returns

Aquagold International  vs.  Unity Bancorp

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Unity Bancorp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unity Bancorp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Unity Bancorp is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aquagold International and Unity Bancorp

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

The idea behind Aquagold International and Unity Bancorp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.