Correlation Between Ubiquiti Networks and Mynaric AG

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

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

Diversification Opportunities for Ubiquiti Networks and Mynaric AG

0.46

Correlation Coefficient

Ubiquiti Networks  Mynaric AG

Very weak diversification

The 3 months correlation between Ubiquiti and Mynaric is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ubiquiti Networks and Mynaric AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mynaric AG ADR 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 Mynaric AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mynaric AG ADR has no effect on the direction of Ubiquiti Networks i.e., Ubiquiti Networks and Mynaric AG go up and down completely randomly.

Pair Corralation between Ubiquiti Networks and Mynaric AG

Allowing for the 90-day total investment horizon Ubiquiti Networks is expected to under-perform the Mynaric AG. But the stock apears to be less risky and, when comparing its historical volatility, Ubiquiti Networks is 1.53 times less risky than Mynaric AG. The stock trades about -0.11 of its potential returns per unit of risk. The Mynaric AG ADR is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  447.00  in Mynaric AG ADR on January 24, 2024 and sell it today you would earn a total of  107.00  from holding Mynaric AG ADR or generate 23.94% return on investment over 90 days.

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

Ubiquiti Networks  vs.  Mynaric AG ADR

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 unfluctuating 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.

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 latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ubiquiti Networks and Mynaric AG

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

The idea behind Ubiquiti Networks and Mynaric AG ADR 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.