Correlation Between InPlay Oil and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Ultra Clean Holdings, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Ultra Clean.
Diversification Opportunities for InPlay Oil and Ultra Clean
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between InPlay and Ultra is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp 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 InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Ultra Clean go up and down completely randomly.
Pair Corralation between InPlay Oil and Ultra Clean
Assuming the 90 days trading horizon InPlay Oil Corp is expected to generate 0.42 times more return on investment than Ultra Clean. However, InPlay Oil Corp is 2.36 times less risky than Ultra Clean. It trades about -0.04 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.11 per unit of risk. If you would invest 124.00 in InPlay Oil Corp on August 30, 2024 and sell it today you would lose (6.00) from holding InPlay Oil Corp or give up 4.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Ultra Clean Holdings
Performance |
| Timeline |
| InPlay Oil Corp |
| Ultra Clean Holdings |
InPlay Oil and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Ultra Clean
The main advantage of trading using opposite InPlay Oil and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.| InPlay Oil vs. Carsales | InPlay Oil vs. GigaMedia | InPlay Oil vs. GRUPO CARSO A1 | InPlay Oil vs. Prosiebensat 1 Media |
| Ultra Clean vs. STMICROELECTRONICS | Ultra Clean vs. Renesas Electronics | Ultra Clean vs. Ryanair Holdings plc | Ultra Clean vs. Enter Air SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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