Correlation Between Ultra Clean and Uber Technologies

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Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Uber Technologies 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 Uber Technologies 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 Uber Technologies, you can compare the effects of market volatilities on Ultra Clean and Uber Technologies 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 Uber Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Uber Technologies.

Diversification Opportunities for Ultra Clean and Uber Technologies

-0.27
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ultra and Uber is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of Ultra Clean i.e., Ultra Clean and Uber Technologies go up and down completely randomly.

Pair Corralation between Ultra Clean and Uber Technologies

Assuming the 90 days horizon Ultra Clean is expected to generate 1.75 times less return on investment than Uber Technologies. But when comparing it to its historical volatility, Ultra Clean Holdings is 1.13 times less risky than Uber Technologies. It trades about 0.22 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  5,830  in Uber Technologies on October 25, 2024 and sell it today you would earn a total of  728.00  from holding Uber Technologies or generate 12.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ultra Clean Holdings  vs.  Uber Technologies

 Performance 
       Timeline  
Ultra Clean Holdings 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ultra Clean reported solid returns over the last few months and may actually be approaching a breakup point.
Uber Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Uber Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ultra Clean and Uber Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ultra Clean and Uber Technologies

The main advantage of trading using opposite Ultra Clean and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.
The idea behind Ultra Clean Holdings and Uber Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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