Correlation Between Ubiquiti Networks and WiSA Technologies

Can any of the company-specific risk be diversified away by investing in both Ubiquiti Networks and WiSA 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 WiSA 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 WiSA Technologies, you can compare the effects of market volatilities on Ubiquiti Networks and WiSA 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 WiSA Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ubiquiti Networks and WiSA Technologies.

Diversification Opportunities for Ubiquiti Networks and WiSA Technologies

0.44

Correlation Coefficient

Ubiquiti Networks  WiSA Technologies

Very weak diversification

The 3 months correlation between Ubiquiti and WiSA is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and WiSA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiSA 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 WiSA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiSA Technologies has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and WiSA Technologies go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and WiSA Technologies

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 13.8 times less return on investment than WiSA Technologies. But when comparing it to its historical volatility, Ubiquiti Networks is 23.28 times less risky than WiSA Technologies. It trades about 0.24 of its potential returns per unit of risk. WiSA Technologies is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  270.00  in WiSA Technologies on February 11, 2024 and sell it today you would earn a total of  48.00  from holding WiSA Technologies or generate 17.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.65%
Values	Daily Returns

Ubiquiti Networks  vs.  WiSA Technologies

Ubiquiti Networks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ubiquiti Networks has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Ubiquiti Networks is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

WiSA Technologies

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in WiSA Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, WiSA Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubiquiti Networks and WiSA Technologies

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

The idea behind Ubiquiti Networks and WiSA 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.