Correlation Between OLB and Unity Software

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

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

Diversification Opportunities for OLB and Unity Software

0.24

Correlation Coefficient

OLB  Unity Software

Modest diversification

The 3 months correlation between OLB and Unity is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding OLB Group and Unity Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Software and OLB 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 OLB Group are associated (or correlated) with Unity Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Software has no effect on the direction of OLB i.e., OLB and Unity Software go up and down completely randomly.

Pair Corralation between OLB and Unity Software

Considering the 90-day investment horizon OLB Group is expected to under-perform the Unity Software. In addition to that, OLB is 1.68 times more volatile than Unity Software. It trades about -0.01 of its total potential returns per unit of risk. Unity Software is currently generating about 0.0 per unit of volatility. If you would invest  3,432  in Unity Software on August 27, 2024 and sell it today you would lose (1,079) from holding Unity Software or give up 31.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

OLB Group  vs.  Unity Software

OLB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OLB Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, OLB is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Unity Software

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Unity Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with OLB and Unity Software

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

The idea behind OLB Group and Unity Software 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.