Correlation Between Ubiquiti Networks and Network 1

Can any of the company-specific risk be diversified away by investing in both Ubiquiti Networks and Network 1 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 Network 1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ubiquiti Networks and Network 1 Technologies, you can compare the effects of market volatilities on Ubiquiti Networks and Network 1 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 Network 1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubiquiti Networks and Network 1.

Diversification Opportunities for Ubiquiti Networks and Network 1

-0.33

Correlation Coefficient

Ubiquiti Networks  Network 1

Very good diversification

The 3 months correlation between Ubiquiti and Network is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Network 1 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Network 1 Technologies 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 Network 1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Network 1 Technologies has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Network 1 go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and Network 1

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 1.16 times more return on investment than Network 1. However, Ubiquiti Networks is 1.16 times more volatile than Network 1 Technologies. It trades about 0.04 of its potential returns per unit of risk. Network 1 Technologies is currently generating about -0.02 per unit of risk. If you would invest  25,929  in Ubiquiti Networks on September 26, 2024 and sell it today you would earn a total of  9,137  from holding Ubiquiti Networks or generate 35.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Ubiquiti Networks  vs.  Network 1 Technologies

Ubiquiti Networks

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Ubiquiti Networks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Network 1 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Network 1 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Ubiquiti Networks and Network 1

The main advantage of trading using opposite Ubiquiti Networks and Network 1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ubiquiti Networks position performs unexpectedly, Network 1 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 Network 1 will offset losses from the drop in Network 1's long position.

The idea behind Ubiquiti Networks and Network 1 Technologies 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.