Correlation Between Unity Software and Credo Technology

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

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

Diversification Opportunities for Unity Software and Credo Technology

0.81

Correlation Coefficient

Unity Software  Credo Technology

Very poor diversification

The 3 months correlation between Unity and Credo is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Unity Software and Credo Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Technology 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 Credo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Technology has no effect on the direction of Unity Software i.e., Unity Software and Credo Technology go up and down completely randomly.

Pair Corralation between Unity Software and Credo Technology

Taking into account the 90-day investment horizon Unity Software is expected to generate 1.17 times less return on investment than Credo Technology. In addition to that, Unity Software is 1.17 times more volatile than Credo Technology Group. It trades about 0.22 of its total potential returns per unit of risk. Credo Technology Group is currently generating about 0.31 per unit of volatility. If you would invest  5,958  in Credo Technology Group on May 15, 2025 and sell it today you would earn a total of  5,899  from holding Credo Technology Group or generate 99.01% return on investment over 90 days.

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

Unity Software  vs.  Credo Technology Group

Unity Software

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Software are ranked lower than 17 (%) 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.

Credo Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Credo Technology Group are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Credo Technology displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Software and Credo Technology

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

The idea behind Unity Software and Credo Technology Group 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.