Correlation Between ULTRA CLEAN and LION ONE
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on ULTRA CLEAN and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and LION ONE.
Diversification Opportunities for ULTRA CLEAN and LION ONE
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ULTRA and LION is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and LION ONE go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and LION ONE
Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 0.78 times more return on investment than LION ONE. However, ULTRA CLEAN HLDGS is 1.28 times less risky than LION ONE. It trades about 0.31 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.05 per unit of risk. If you would invest 3,060 in ULTRA CLEAN HLDGS on September 1, 2024 and sell it today you would earn a total of 560.00 from holding ULTRA CLEAN HLDGS or generate 18.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ULTRA CLEAN HLDGS vs. LION ONE METALS
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| LION ONE METALS |
ULTRA CLEAN and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and LION ONE
The main advantage of trading using opposite ULTRA CLEAN and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| ULTRA CLEAN vs. DEVRY EDUCATION GRP | ULTRA CLEAN vs. WILLIS LEASE FIN | ULTRA CLEAN vs. G8 EDUCATION | ULTRA CLEAN vs. Grand Canyon Education |
| LION ONE vs. Corporate Office Properties | LION ONE vs. Eagle Materials | LION ONE vs. Plastic Omnium | LION ONE vs. KENEDIX OFFICE INV |
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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