Correlation Between Ultra Clean and Digi International
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Digi International 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 Digi International 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 Digi International, you can compare the effects of market volatilities on Ultra Clean and Digi International 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 Digi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Digi International.
Diversification Opportunities for Ultra Clean and Digi International
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ultra and Digi is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Digi International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digi International 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 Digi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digi International has no effect on the direction of Ultra Clean i.e., Ultra Clean and Digi International go up and down completely randomly.
Pair Corralation between Ultra Clean and Digi International
Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Digi International. In addition to that, Ultra Clean is 1.09 times more volatile than Digi International. It trades about -0.01 of its total potential returns per unit of risk. Digi International is currently generating about 0.03 per unit of volatility. If you would invest 2,956 in Digi International on August 27, 2024 and sell it today you would earn a total of 339.00 from holding Digi International or generate 11.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ultra Clean Holdings vs. Digi International
Performance |
| Timeline |
| Ultra Clean Holdings |
| Digi International |
Ultra Clean and Digi International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Digi International
The main advantage of trading using opposite Ultra Clean and Digi International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Digi International 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 Digi International will offset losses from the drop in Digi International's long position.The idea behind Ultra Clean Holdings and Digi International 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.| Digi International vs. Ichor Holdings | Digi International vs. Fabrinet | Digi International vs. Hello Group | Digi International 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |