Correlation Between Ultra Clean and GROUP

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Can any of the company-specific risk be diversified away by investing in both Ultra Clean and GROUP 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 GROUP 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 GROUP 1 AUTOMOTIVE, you can compare the effects of market volatilities on Ultra Clean and GROUP 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 GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and GROUP.

Diversification Opportunities for Ultra Clean and GROUP

-0.01
  Correlation Coefficient

Good diversification

The 3 months correlation between Ultra and GROUP is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and GROUP 1 AUTOMOTIVE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GROUP 1 AUTOMOTIVE 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 GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GROUP 1 AUTOMOTIVE has no effect on the direction of Ultra Clean i.e., Ultra Clean and GROUP go up and down completely randomly.

Pair Corralation between Ultra Clean and GROUP

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the GROUP. In addition to that, Ultra Clean is 6.24 times more volatile than GROUP 1 AUTOMOTIVE. It trades about -0.01 of its total potential returns per unit of risk. GROUP 1 AUTOMOTIVE is currently generating about 0.01 per unit of volatility. If you would invest  9,079  in GROUP 1 AUTOMOTIVE on August 25, 2024 and sell it today you would earn a total of  72.00  from holding GROUP 1 AUTOMOTIVE or generate 0.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy94.74%
ValuesDaily Returns

Ultra Clean Holdings  vs.  GROUP 1 AUTOMOTIVE

 Performance 
       Timeline  
Ultra Clean Holdings 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ultra Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
GROUP 1 AUTOMOTIVE 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GROUP 1 AUTOMOTIVE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, GROUP is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ultra Clean and GROUP Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ultra Clean and GROUP

The main advantage of trading using opposite Ultra Clean and GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean position performs unexpectedly, GROUP 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 GROUP will offset losses from the drop in GROUP's long position.
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The idea behind Ultra Clean Holdings and GROUP 1 AUTOMOTIVE 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.
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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