Correlation Between REMEDY ENTERTAINMENT and ULTRA CLEAN

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

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

Diversification Opportunities for REMEDY ENTERTAINMENT and ULTRA CLEAN

0.2

Correlation Coefficient

REMEDY ENTERTAINMENT  ULTRA CLEAN

Modest diversification

The 3 months correlation between REMEDY and ULTRA is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding REMEDY ENTERTAINMENT OYJ 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 REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ 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 REMEDY ENTERTAINMENT i.e., REMEDY ENTERTAINMENT and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between REMEDY ENTERTAINMENT and ULTRA CLEAN

Assuming the 90 days horizon REMEDY ENTERTAINMENT OYJ is expected to generate 0.55 times more return on investment than ULTRA CLEAN. However, REMEDY ENTERTAINMENT OYJ is 1.81 times less risky than ULTRA CLEAN. It trades about 0.03 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.13 per unit of risk. If you would invest  1,336  in REMEDY ENTERTAINMENT OYJ on December 20, 2024 and sell it today you would earn a total of  34.00  from holding REMEDY ENTERTAINMENT OYJ or generate 2.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

REMEDY ENTERTAINMENT OYJ  vs.  ULTRA CLEAN HLDGS

REMEDY ENTERTAINMENT OYJ

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REMEDY ENTERTAINMENT OYJ are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REMEDY ENTERTAINMENT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 weak 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 REMEDY ENTERTAINMENT and ULTRA CLEAN

The main advantage of trading using opposite REMEDY ENTERTAINMENT and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REMEDY ENTERTAINMENT 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 REMEDY ENTERTAINMENT OYJ 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.