Correlation Between Guangdong Investment and ULTRA CLEAN
Can any of the company-specific risk be diversified away by investing in both Guangdong Investment 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 Guangdong Investment and ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guangdong Investment Limited and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on Guangdong Investment 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 Guangdong Investment with a short position of ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangdong Investment and ULTRA CLEAN.
Diversification Opportunities for Guangdong Investment and ULTRA CLEAN
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guangdong and ULTRA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Guangdong Investment Limited 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 Guangdong Investment 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 Guangdong Investment Limited 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 Guangdong Investment i.e., Guangdong Investment and ULTRA CLEAN go up and down completely randomly.
Pair Corralation between Guangdong Investment and ULTRA CLEAN
Assuming the 90 days horizon Guangdong Investment Limited is expected to under-perform the ULTRA CLEAN. In addition to that, Guangdong Investment is 1.35 times more volatile than ULTRA CLEAN HLDGS. It trades about -0.11 of its total potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.08 per unit of volatility. If you would invest 3,760 in ULTRA CLEAN HLDGS on November 5, 2024 and sell it today you would lose (220.00) from holding ULTRA CLEAN HLDGS or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guangdong Investment Limited vs. ULTRA CLEAN HLDGS
Performance |
| Timeline |
| Guangdong Investment |
| ULTRA CLEAN HLDGS |
Guangdong Investment and ULTRA CLEAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guangdong Investment and ULTRA CLEAN
The main advantage of trading using opposite Guangdong Investment and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangdong Investment 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.| Guangdong Investment vs. United Utilities Group | Guangdong Investment vs. Companhia de Saneamento | Guangdong Investment vs. TTW Public |
| ULTRA CLEAN vs. Acadia Healthcare | ULTRA CLEAN vs. United States Steel | ULTRA CLEAN vs. Daido Steel Co | ULTRA CLEAN vs. PT Steel Pipe |
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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