Correlation Between Photronics and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both Photronics 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 Photronics and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Photronics and Ultra Clean Holdings, you can compare the effects of market volatilities on Photronics 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 Photronics with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photronics and Ultra Clean.
Diversification Opportunities for Photronics and Ultra Clean
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Photronics and Ultra is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Photronics 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 Photronics 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 Photronics 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 Photronics i.e., Photronics and Ultra Clean go up and down completely randomly.
Pair Corralation between Photronics and Ultra Clean
Given the investment horizon of 90 days Photronics is expected to generate 0.76 times more return on investment than Ultra Clean. However, Photronics is 1.32 times less risky than Ultra Clean. It trades about -0.02 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.02 per unit of risk. If you would invest 2,729 in Photronics on August 24, 2024 and sell it today you would lose (285.00) from holding Photronics or give up 10.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Photronics vs. Ultra Clean Holdings
Performance |
| Timeline |
| Photronics |
| Ultra Clean Holdings |
Photronics and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Photronics and Ultra Clean
The main advantage of trading using opposite Photronics and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Photronics 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.| Photronics vs. Aehr Test Systems | Photronics vs. Lam Research Corp | Photronics vs. KLA Tencor | Photronics vs. Kulicke and Soffa |
| Ultra Clean vs. Amtech Systems | Ultra Clean vs. Veeco Instruments | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Onto Innovation |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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