Correlation Between Adtalem Global and ULTRA CLEAN

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Can any of the company-specific risk be diversified away by investing in both Adtalem Global 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 Adtalem Global and ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adtalem Global Education and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on Adtalem Global 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 Adtalem Global with a short position of ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adtalem Global and ULTRA CLEAN.

Diversification Opportunities for Adtalem Global and ULTRA CLEAN

0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Adtalem and ULTRA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Adtalem Global Education and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS and Adtalem Global 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 Adtalem Global Education 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 HLDGS has no effect on the direction of Adtalem Global i.e., Adtalem Global and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Adtalem Global and ULTRA CLEAN

Assuming the 90 days trading horizon Adtalem Global Education is expected to generate 0.59 times more return on investment than ULTRA CLEAN. However, Adtalem Global Education is 1.71 times less risky than ULTRA CLEAN. It trades about 0.12 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.1 per unit of risk. If you would invest  8,550  in Adtalem Global Education on October 30, 2024 and sell it today you would earn a total of  700.00  from holding Adtalem Global Education or generate 8.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Adtalem Global Education  vs.  ULTRA CLEAN HLDGS

 Performance 
       Timeline  
Adtalem Global Education 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Adtalem Global Education are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Adtalem Global unveiled solid returns over the last few months and may actually be approaching a breakup point.
ULTRA CLEAN HLDGS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ULTRA CLEAN HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, ULTRA CLEAN is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Adtalem Global and ULTRA CLEAN Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Adtalem Global and ULTRA CLEAN

The main advantage of trading using opposite Adtalem Global and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adtalem Global 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.
The idea behind Adtalem Global Education and ULTRA CLEAN HLDGS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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