Correlation Between Ultra Clean and China Datang
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and China Datang 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 China Datang 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 China Datang, you can compare the effects of market volatilities on Ultra Clean and China Datang 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 China Datang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and China Datang.
Diversification Opportunities for Ultra Clean and China Datang
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ultra and China is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Datang 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 China Datang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Datang has no effect on the direction of Ultra Clean i.e., Ultra Clean and China Datang go up and down completely randomly.
Pair Corralation between Ultra Clean and China Datang
Assuming the 90 days horizon Ultra Clean is expected to generate 3.31 times less return on investment than China Datang. But when comparing it to its historical volatility, Ultra Clean Holdings is 1.4 times less risky than China Datang. It trades about 0.02 of its potential returns per unit of risk. China Datang is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15.00 in China Datang on October 24, 2024 and sell it today you would earn a total of 9.00 from holding China Datang or generate 60.0% 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. China Datang
Performance |
| Timeline |
| Ultra Clean Holdings |
| China Datang |
Ultra Clean and China Datang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and China Datang
The main advantage of trading using opposite Ultra Clean and China Datang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, China Datang 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 China Datang will offset losses from the drop in China Datang's long position.| Ultra Clean vs. Air Transport Services | Ultra Clean vs. DALATA HOTEL | Ultra Clean vs. JD SPORTS FASH | Ultra Clean vs. SPORT LISBOA E |
| China Datang vs. ALERION CLEANPOWER | China Datang vs. CSSC Offshore Marine | China Datang vs. WT OFFSHORE | China Datang vs. Ultra Clean Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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