Correlation Between Ultra Clean and Caravelle International
Can any of the company-specific risk be diversified away by investing in both Ultra Clean and Caravelle 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 Caravelle 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 Caravelle International Group, you can compare the effects of market volatilities on Ultra Clean and Caravelle 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 Caravelle International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Caravelle International.
Diversification Opportunities for Ultra Clean and Caravelle International
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ultra and Caravelle is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Caravelle International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caravelle 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 Caravelle International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caravelle International has no effect on the direction of Ultra Clean i.e., Ultra Clean and Caravelle International go up and down completely randomly.
Pair Corralation between Ultra Clean and Caravelle International
Given the investment horizon of 90 days Ultra Clean Holdings is expected to generate 0.37 times more return on investment than Caravelle International. However, Ultra Clean Holdings is 2.73 times less risky than Caravelle International. It trades about 0.03 of its potential returns per unit of risk. Caravelle International Group is currently generating about -0.16 per unit of risk. If you would invest 3,664 in Ultra Clean Holdings on November 3, 2024 and sell it today you would earn a total of 23.00 from holding Ultra Clean Holdings or generate 0.63% 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. Caravelle International Group
Performance |
| Timeline |
| Ultra Clean Holdings |
| Caravelle International |
Ultra Clean and Caravelle International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and Caravelle International
The main advantage of trading using opposite Ultra Clean and Caravelle International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, Caravelle 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 Caravelle International will offset losses from the drop in Caravelle International's long position.| Ultra Clean vs. Amtech Systems | Ultra Clean vs. Veeco Instruments | Ultra Clean vs. Cohu Inc | Ultra Clean vs. Onto Innovation |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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