Correlation Between Harmonic and Ubiquiti Networks

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

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

Diversification Opportunities for Harmonic and Ubiquiti Networks

0.16

Correlation Coefficient

Harmonic  Ubiquiti Networks

Average diversification

The 3 months correlation between Harmonic and Ubiquiti is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Harmonic and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks and Harmonic 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 Harmonic are associated (or correlated) with Ubiquiti Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ubiquiti Networks has no effect on the direction of Harmonic i.e., Harmonic and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between Harmonic and Ubiquiti Networks

Given the investment horizon of 90 days Harmonic is expected to under-perform the Ubiquiti Networks. In addition to that, Harmonic is 1.18 times more volatile than Ubiquiti Networks. It trades about -0.05 of its total potential returns per unit of risk. Ubiquiti Networks is currently generating about 0.15 per unit of volatility. If you would invest  12,047  in Ubiquiti Networks on February 23, 2024 and sell it today you would earn a total of  3,159  from holding Ubiquiti Networks or generate 26.22% return on investment over 90 days.

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

Harmonic  vs.  Ubiquiti Networks

Harmonic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Harmonic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ubiquiti Networks

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 11 (%) 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.

Pair Trading with Harmonic and Ubiquiti Networks

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

The idea behind Harmonic and Ubiquiti Networks 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.