Correlation Between Ubiquiti Networks and ClearSign Combustion

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

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

Diversification Opportunities for Ubiquiti Networks and ClearSign Combustion

0.71

Correlation Coefficient

Ubiquiti Networks  ClearSign Combustion

Poor diversification

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

Pair Corralation between Ubiquiti Networks and ClearSign Combustion

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 0.58 times more return on investment than ClearSign Combustion. However, Ubiquiti Networks is 1.72 times less risky than ClearSign Combustion. It trades about -0.02 of its potential returns per unit of risk. ClearSign Combustion is currently generating about -0.17 per unit of risk. If you would invest  33,494  in Ubiquiti Networks on December 29, 2024 and sell it today you would lose (2,467) from holding Ubiquiti Networks or give up 7.37% of portfolio value over 90 days.

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

Ubiquiti Networks  vs.  ClearSign Combustion

Ubiquiti Networks

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ubiquiti Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Ubiquiti Networks is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

ClearSign Combustion

Risk-Adjusted Performance

Very Weak

Over the last 90 days ClearSign Combustion has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ubiquiti Networks and ClearSign Combustion

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

The idea behind Ubiquiti Networks and ClearSign Combustion 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.