Correlation Between Ubiquiti Networks and Knightscope

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

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

Diversification Opportunities for Ubiquiti Networks and Knightscope

0.65

Correlation Coefficient

Ubiquiti Networks  Knightscope

Poor diversification

The 3 months correlation between Ubiquiti and Knightscope is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Knightscope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knightscope 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 Knightscope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knightscope has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Knightscope go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and Knightscope

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 0.38 times more return on investment than Knightscope. However, Ubiquiti Networks is 2.6 times less risky than Knightscope. It trades about 0.31 of its potential returns per unit of risk. Knightscope is currently generating about 0.08 per unit of risk. If you would invest  26,226  in Ubiquiti Networks on August 30, 2024 and sell it today you would earn a total of  9,425  from holding Ubiquiti Networks or generate 35.94% return on investment over 90 days.

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

Ubiquiti Networks  vs.  Knightscope

Ubiquiti Networks

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Ubiquiti Networks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Knightscope

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knightscope are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, Knightscope reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubiquiti Networks and Knightscope

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

The idea behind Ubiquiti Networks and Knightscope 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 Commodity Directory module to find actively traded commodities issued by global exchanges.