Correlation Between Mynaric AG and Ubiquiti Networks

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

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

Diversification Opportunities for Mynaric AG and Ubiquiti Networks

0.33

Correlation Coefficient

Mynaric AG  Ubiquiti Networks

Weak diversification

The 3 months correlation between Mynaric and Ubiquiti is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Mynaric AG ADR and Ubiquiti Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ubiquiti Networks and Mynaric AG 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 Mynaric AG ADR 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 Mynaric AG i.e., Mynaric AG and Ubiquiti Networks go up and down completely randomly.

Pair Corralation between Mynaric AG and Ubiquiti Networks

Given the investment horizon of 90 days Mynaric AG ADR is expected to generate 2.06 times more return on investment than Ubiquiti Networks. However, Mynaric AG is 2.06 times more volatile than Ubiquiti Networks. It trades about 0.0 of its potential returns per unit of risk. Ubiquiti Networks is currently generating about -0.04 per unit of risk. If you would invest  915.00  in Mynaric AG ADR on January 26, 2024 and sell it today you would lose (387.00) from holding Mynaric AG ADR or give up 42.3% of portfolio value over 90 days.

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

Mynaric AG ADR  vs.  Ubiquiti Networks

Mynaric AG ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mynaric AG ADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mynaric AG is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

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 abnormal performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Mynaric AG and Ubiquiti Networks

The main advantage of trading using opposite Mynaric AG and Ubiquiti Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mynaric AG 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 Mynaric AG ADR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .