Correlation Between Lion Biotechnologies and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and Ultra Clean 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 Lion Biotechnologies and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and Ultra Clean Holdings, you can compare the effects of market volatilities on Lion Biotechnologies and Ultra Clean 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 Lion Biotechnologies with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and Ultra Clean.
Diversification Opportunities for Lion Biotechnologies and Ultra Clean
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lion and Ultra is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and Ultra Clean go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and Ultra Clean
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the Ultra Clean. In addition to that, Lion Biotechnologies is 1.05 times more volatile than Ultra Clean Holdings. It trades about -0.19 of its total potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.06 per unit of volatility. If you would invest 3,240 in Ultra Clean Holdings on August 25, 2024 and sell it today you would earn a total of 140.00 from holding Ultra Clean Holdings or generate 4.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. Ultra Clean Holdings
Performance |
| Timeline |
| Lion Biotechnologies |
| Ultra Clean Holdings |
Lion Biotechnologies and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and Ultra Clean
The main advantage of trading using opposite Lion Biotechnologies and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.| Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc | Lion Biotechnologies vs. Apple Inc |
| Ultra Clean vs. ASML HOLDING NY | Ultra Clean vs. Applied Materials | Ultra Clean vs. Lam Research | Ultra Clean vs. Superior Plus Corp |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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