Correlation Between Ubiquiti Networks and Celestica

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

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

Diversification Opportunities for Ubiquiti Networks and Celestica

-0.28

Correlation Coefficient

Ubiquiti Networks  Celestica

Very good diversification

The 3 months correlation between Ubiquiti and Celestica is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Celestica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celestica 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 Celestica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celestica has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Celestica go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and Celestica

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to generate 0.73 times more return on investment than Celestica. However, Ubiquiti Networks is 1.37 times less risky than Celestica. It trades about 0.51 of its potential returns per unit of risk. Celestica is currently generating about 0.18 per unit of risk. If you would invest  10,693  in Ubiquiti Networks on February 16, 2024 and sell it today you would earn a total of  3,319  from holding Ubiquiti Networks or generate 31.04% 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.  Celestica

Ubiquiti Networks

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ubiquiti Networks are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating forward indicators, Ubiquiti Networks may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Celestica

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Celestica are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Celestica unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ubiquiti Networks and Celestica

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

The idea behind Ubiquiti Networks and Celestica 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.