Correlation Between Ultra Clean and Check Point
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Check Point 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 Check Point into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Clean Holdings and Check Point Software, you can compare the effects of market volatilities on Ultra Clean and Check Point 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 Check Point. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Check Point.
Diversification Opportunities for Ultra Clean and Check Point
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ultra and Check is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Check Point Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Check Point Software 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 Holdings are associated (or correlated) with Check Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Check Point Software has no effect on the direction of Ultra Clean i.e., Ultra Clean and Check Point go up and down completely randomly.
Pair Corralation between Ultra Clean and Check Point
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 1.81 times more return on investment than Check Point. However, Ultra Clean is 1.81 times more volatile than Check Point Software. It trades about 0.23 of its potential returns per unit of risk. Check Point Software is currently generating about 0.32 per unit of risk. If you would invest 3,100 in Ultra Clean Holdings on September 3, 2024 and sell it today you would earn a total of 400.00 from holding Ultra Clean Holdings or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Check Point Software
Performance |
| Timeline |
| Ultra Clean Holdings |
| Check Point Software |
Ultra Clean and Check Point Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Check Point
The main advantage of trading using opposite Ultra Clean and Check Point positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Check Point 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 Check Point will offset losses from the drop in Check Point's long position.| Ultra Clean vs. ASML HOLDING NY | Ultra Clean vs. ASML Holding NV | Ultra Clean vs. ASML Holding NV | Ultra Clean vs. Lam Research |
| Check Point vs. Alfa Financial Software | Check Point vs. ASURE SOFTWARE | Check Point vs. CPU SOFTWAREHOUSE | Check Point vs. USU Software AG |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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