Correlation Between Ubiquiti Networks and Wialan Technologies

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

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

Diversification Opportunities for Ubiquiti Networks and Wialan Technologies

-0.32

Correlation Coefficient

Ubiquiti Networks  Wialan Technologies

Very good diversification

The 3 months correlation between Ubiquiti and Wialan is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Wialan Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wialan 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 Wialan Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wialan Technologies has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Wialan Technologies go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and Wialan Technologies

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 0.35 times more return on investment than Wialan Technologies. However, Ubiquiti Networks is 2.89 times less risky than Wialan Technologies. It trades about 0.26 of its potential returns per unit of risk. Wialan Technologies is currently generating about 0.0 per unit of risk. If you would invest  20,095  in Ubiquiti Networks on September 12, 2024 and sell it today you would earn a total of  13,194  from holding Ubiquiti Networks or generate 65.66% 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.  Wialan Technologies

Ubiquiti Networks

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 20 (%) 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.

Wialan Technologies

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Wialan Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Wialan Technologies is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ubiquiti Networks and Wialan Technologies

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

The idea behind Ubiquiti Networks and Wialan 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.