Correlation Between ULTRA CLEAN and Sims Metal
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN and Sims Metal 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 ULTRA CLEAN and Sims Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ULTRA CLEAN HLDGS and Sims Metal Management, you can compare the effects of market volatilities on ULTRA CLEAN and Sims Metal 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 ULTRA CLEAN with a short position of Sims Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Sims Metal.
Diversification Opportunities for ULTRA CLEAN and Sims Metal
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ULTRA and Sims is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Sims Metal Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims Metal Management and ULTRA CLEAN 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 ULTRA CLEAN HLDGS are associated (or correlated) with Sims Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims Metal Management has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Sims Metal go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and Sims Metal
Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 1.29 times more return on investment than Sims Metal. However, ULTRA CLEAN is 1.29 times more volatile than Sims Metal Management. It trades about 0.02 of its potential returns per unit of risk. Sims Metal Management is currently generating about 0.0 per unit of risk. If you would invest 3,087 in ULTRA CLEAN HLDGS on August 31, 2024 and sell it today you would earn a total of 473.00 from holding ULTRA CLEAN HLDGS or generate 15.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ULTRA CLEAN HLDGS vs. Sims Metal Management
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| Sims Metal Management |
ULTRA CLEAN and Sims Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and Sims Metal
The main advantage of trading using opposite ULTRA CLEAN and Sims Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN position performs unexpectedly, Sims Metal 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 Sims Metal will offset losses from the drop in Sims Metal's long position.| ULTRA CLEAN vs. SIVERS SEMICONDUCTORS AB | ULTRA CLEAN vs. Darden Restaurants | ULTRA CLEAN vs. Reliance Steel Aluminum | ULTRA CLEAN vs. Q2M Managementberatung AG |
| Sims Metal vs. SALESFORCE INC CDR | Sims Metal vs. CARSALESCOM | Sims Metal vs. ADRIATIC METALS LS 013355 | Sims Metal vs. AAC TECHNOLOGHLDGADR |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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