Correlation Between ULTRA CLEAN and Sinopec Shanghai
Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN and Sinopec Shanghai 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 Sinopec Shanghai 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 Sinopec Shanghai Petrochemical, you can compare the effects of market volatilities on ULTRA CLEAN and Sinopec Shanghai 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 Sinopec Shanghai. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Sinopec Shanghai.
Diversification Opportunities for ULTRA CLEAN and Sinopec Shanghai
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ULTRA and Sinopec is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Sinopec Shanghai Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopec Shanghai Pet 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 Sinopec Shanghai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopec Shanghai Pet has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Sinopec Shanghai go up and down completely randomly.
Pair Corralation between ULTRA CLEAN and Sinopec Shanghai
Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 1.36 times less return on investment than Sinopec Shanghai. But when comparing it to its historical volatility, ULTRA CLEAN HLDGS is 2.53 times less risky than Sinopec Shanghai. It trades about 0.25 of its potential returns per unit of risk. Sinopec Shanghai Petrochemical is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Sinopec Shanghai Petrochemical on September 2, 2024 and sell it today you would earn a total of 2.00 from holding Sinopec Shanghai Petrochemical or generate 15.38% 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. Sinopec Shanghai Petrochemical
Performance |
| Timeline |
| ULTRA CLEAN HLDGS |
| Sinopec Shanghai Pet |
ULTRA CLEAN and Sinopec Shanghai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ULTRA CLEAN and Sinopec Shanghai
The main advantage of trading using opposite ULTRA CLEAN and Sinopec Shanghai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN position performs unexpectedly, Sinopec Shanghai 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 Sinopec Shanghai will offset losses from the drop in Sinopec Shanghai's long position.| ULTRA CLEAN vs. Ping An Insurance | ULTRA CLEAN vs. COSTCO WHOLESALE CDR | ULTRA CLEAN vs. Zurich Insurance Group | ULTRA CLEAN vs. BURLINGTON STORES |
| Sinopec Shanghai vs. Singapore Telecommunications Limited | Sinopec Shanghai vs. ULTRA CLEAN HLDGS | Sinopec Shanghai vs. United Utilities Group | Sinopec Shanghai vs. CVW CLEANTECH INC |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stocks Directory Find actively traded stocks across global markets |