Correlation Between Ultra Clean and Geely Automobile
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Geely Automobile 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 Geely Automobile 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 Geely Automobile Holdings, you can compare the effects of market volatilities on Ultra Clean and Geely Automobile 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 Geely Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Geely Automobile.
Diversification Opportunities for Ultra Clean and Geely Automobile
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ultra and Geely is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Geely Automobile Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Geely Automobile Holdings 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 Geely Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Geely Automobile Holdings has no effect on the direction of Ultra Clean i.e., Ultra Clean and Geely Automobile go up and down completely randomly.
Pair Corralation between Ultra Clean and Geely Automobile
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 1.34 times more return on investment than Geely Automobile. However, Ultra Clean is 1.34 times more volatile than Geely Automobile Holdings. It trades about 0.3 of its potential returns per unit of risk. Geely Automobile Holdings is currently generating about -0.19 per unit of risk. If you would invest 3,300 in Ultra Clean Holdings on October 24, 2024 and sell it today you would earn a total of 380.00 from holding Ultra Clean Holdings or generate 11.52% 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. Geely Automobile Holdings
Performance |
| Timeline |
| Ultra Clean Holdings |
| Geely Automobile Holdings |
Ultra Clean and Geely Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Geely Automobile
The main advantage of trading using opposite Ultra Clean and Geely Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Geely Automobile 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 Geely Automobile will offset losses from the drop in Geely Automobile'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 |
| Geely Automobile vs. RCI Hospitality Holdings | Geely Automobile vs. National Health Investors | Geely Automobile vs. Ultra Clean Holdings | Geely Automobile vs. Sekisui Chemical Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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