Correlation Between Unisys and Formula Systems

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

By analyzing existing cross correlation between Unisys and Formula Systems 1985, you can compare the effects of market volatilities on Unisys and Formula Systems 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 Unisys with a short position of Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unisys and Formula Systems.

Diversification Opportunities for Unisys and Formula Systems

-0.71

Correlation Coefficient

Unisys  Formula Systems

Pay attention - limited upside

The 3 months correlation between Unisys and Formula is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Unisys and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 and Unisys 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 Unisys are associated (or correlated) with Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of Unisys i.e., Unisys and Formula Systems go up and down completely randomly.

Pair Corralation between Unisys and Formula Systems

Considering the 90-day investment horizon Unisys is expected to under-perform the Formula Systems. But the stock apears to be less risky and, when comparing its historical volatility, Unisys is 1.31 times less risky than Formula Systems. The stock trades about -0.16 of its potential returns per unit of risk. The Formula Systems 1985 is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,934  in Formula Systems 1985 on February 4, 2024 and sell it today you would lose (254.00) from holding Formula Systems 1985 or give up 3.2% of portfolio value over 90 days.

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

Unisys  vs.  Formula Systems 1985

Unisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Formula Systems 1985

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Formula Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unisys and Formula Systems

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

The idea behind Unisys and Formula Systems 1985 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.