Correlation Between Ubiquiti Networks and VerifyMe

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

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

Diversification Opportunities for Ubiquiti Networks and VerifyMe

-0.85

Correlation Coefficient

Ubiquiti Networks  VerifyMe

Pay attention - limited upside

The 3 months correlation between Ubiquiti and VerifyMe is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and VerifyMe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VerifyMe 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 VerifyMe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VerifyMe has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and VerifyMe go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and VerifyMe

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 0.55 times more return on investment than VerifyMe. However, Ubiquiti Networks is 1.83 times less risky than VerifyMe. It trades about 0.32 of its potential returns per unit of risk. VerifyMe is currently generating about -0.11 per unit of risk. If you would invest  19,258  in Ubiquiti Networks on August 30, 2024 and sell it today you would earn a total of  15,993  from holding Ubiquiti Networks or generate 83.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ubiquiti Networks  vs.  VerifyMe

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 unfluctuating forward indicators, Ubiquiti Networks demonstrated solid returns over the last few months and may actually be approaching a breakup point.

VerifyMe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VerifyMe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ubiquiti Networks and VerifyMe

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

The idea behind Ubiquiti Networks and VerifyMe 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..