Correlation Between Ubiquiti Networks and ClearOne

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

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

Diversification Opportunities for Ubiquiti Networks and ClearOne

-0.04

Correlation Coefficient

Ubiquiti Networks  ClearOne

Good diversification

The 3 months correlation between Ubiquiti and ClearOne is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and ClearOne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClearOne 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 ClearOne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClearOne has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and ClearOne go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and ClearOne

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 82.9 times less return on investment than ClearOne. But when comparing it to its historical volatility, Ubiquiti Networks is 2.64 times less risky than ClearOne. It trades about 0.0 of its potential returns per unit of risk. ClearOne is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  49.00  in ClearOne on December 1, 2024 and sell it today you would earn a total of  3.00  from holding ClearOne or generate 6.12% return on investment over 90 days.

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

Ubiquiti Networks  vs.  ClearOne

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.

ClearOne

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ClearOne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, ClearOne displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubiquiti Networks and ClearOne

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

The idea behind Ubiquiti Networks and ClearOne 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.