Correlation Between Wenzhou Kangning and ULTRA CLEAN

Can any of the company-specific risk be diversified away by investing in both Wenzhou Kangning and ULTRA CLEAN 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 Wenzhou Kangning and ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Wenzhou Kangning Hospital and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on Wenzhou Kangning and ULTRA CLEAN 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 Wenzhou Kangning with a short position of ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wenzhou Kangning and ULTRA CLEAN.

Diversification Opportunities for Wenzhou Kangning and ULTRA CLEAN

0.72

Correlation Coefficient

Wenzhou Kangning  ULTRA CLEAN

Poor diversification

The 3 months correlation between Wenzhou and ULTRA is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Wenzhou Kangning Hospital and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS and Wenzhou Kangning 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 Wenzhou Kangning Hospital are associated (or correlated) with ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of Wenzhou Kangning i.e., Wenzhou Kangning and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Wenzhou Kangning and ULTRA CLEAN

Assuming the 90 days trading horizon Wenzhou Kangning Hospital is expected to under-perform the ULTRA CLEAN. But the stock apears to be less risky and, when comparing its historical volatility, Wenzhou Kangning Hospital is 1.49 times less risky than ULTRA CLEAN. The stock trades about -0.24 of its potential returns per unit of risk. The ULTRA CLEAN HLDGS is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest  3,480  in ULTRA CLEAN HLDGS on December 23, 2024 and sell it today you would lose (1,240) from holding ULTRA CLEAN HLDGS or give up 35.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Wenzhou Kangning Hospital  vs.  ULTRA CLEAN HLDGS

Wenzhou Kangning Hospital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wenzhou Kangning Hospital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

Very Weak

Over the last 90 days ULTRA CLEAN HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Wenzhou Kangning and ULTRA CLEAN

The main advantage of trading using opposite Wenzhou Kangning and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wenzhou Kangning position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.

The idea behind Wenzhou Kangning Hospital and ULTRA CLEAN HLDGS 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.