Correlation Between Ultra Clean and CARSALES
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and CARSALES 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 CARSALES 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 CARSALESCOM, you can compare the effects of market volatilities on Ultra Clean and CARSALES 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 CARSALES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and CARSALES.
Diversification Opportunities for Ultra Clean and CARSALES
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ultra and CARSALES is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and CARSALESCOM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CARSALESCOM 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 CARSALES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CARSALESCOM has no effect on the direction of Ultra Clean i.e., Ultra Clean and CARSALES go up and down completely randomly.
Pair Corralation between Ultra Clean and CARSALES
Assuming the 90 days horizon Ultra Clean Holdings is expected to under-perform the CARSALES. In addition to that, Ultra Clean is 2.22 times more volatile than CARSALESCOM. It trades about -0.04 of its total potential returns per unit of risk. CARSALESCOM is currently generating about 0.0 per unit of volatility. If you would invest 2,012 in CARSALESCOM on December 11, 2024 and sell it today you would lose (42.00) from holding CARSALESCOM or give up 2.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.63% |
| Values | Daily Returns |
Ultra Clean Holdings vs. CARSALESCOM
Performance |
| Timeline |
| Ultra Clean Holdings |
| CARSALESCOM |
Ultra Clean and CARSALES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and CARSALES
The main advantage of trading using opposite Ultra Clean and CARSALES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, CARSALES 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 CARSALES will offset losses from the drop in CARSALES's long position.| Ultra Clean vs. Zijin Mining Group | ||
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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