Correlation Between GAMING FAC and ULTRA CLEAN

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

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

Diversification Opportunities for GAMING FAC and ULTRA CLEAN

-0.13

Correlation Coefficient

GAMING FAC  ULTRA CLEAN

Good diversification

The 3 months correlation between GAMING and ULTRA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding GAMING FAC SA 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 GAMING FAC 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 GAMING FAC SA 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 GAMING FAC i.e., GAMING FAC and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between GAMING FAC and ULTRA CLEAN

Assuming the 90 days horizon GAMING FAC is expected to generate 2.84 times less return on investment than ULTRA CLEAN. But when comparing it to its historical volatility, GAMING FAC SA is 1.16 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 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,540  in ULTRA CLEAN HLDGS on October 6, 2024 and sell it today you would earn a total of  80.00  from holding ULTRA CLEAN HLDGS or generate 2.26% return on investment over 90 days.

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

GAMING FAC SA  vs.  ULTRA CLEAN HLDGS

GAMING FAC SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GAMING FAC SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ULTRA CLEAN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with GAMING FAC and ULTRA CLEAN

The main advantage of trading using opposite GAMING FAC and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GAMING FAC 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 GAMING FAC SA 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.