Correlation Between DATANG INTL and Ultra Clean

Can any of the company-specific risk be diversified away by investing in both DATANG INTL 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 DATANG INTL and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DATANG INTL POW and Ultra Clean Holdings, you can compare the effects of market volatilities on DATANG INTL 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 DATANG INTL with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Ultra Clean.

Diversification Opportunities for DATANG INTL and Ultra Clean

-0.21

Correlation Coefficient

DATANG INTL  Ultra Clean

Very good diversification

The 3 months correlation between DATANG and Ultra is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings and DATANG INTL 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 DATANG INTL POW 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 Holdings has no effect on the direction of DATANG INTL i.e., DATANG INTL and Ultra Clean go up and down completely randomly.

Pair Corralation between DATANG INTL and Ultra Clean

Assuming the 90 days trading horizon DATANG INTL POW is expected to under-perform the Ultra Clean. In addition to that, DATANG INTL is 1.52 times more volatile than Ultra Clean Holdings. It trades about -0.09 of its total potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.31 per unit of volatility. If you would invest  3,300  in Ultra Clean Holdings on October 22, 2024 and sell it today you would earn a total of  380.00  from holding Ultra Clean Holdings or generate 11.52% return on investment over 90 days.

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

DATANG INTL POW  vs.  Ultra Clean Holdings

DATANG INTL POW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATANG INTL POW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Ultra Clean Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ultra Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATANG INTL and Ultra Clean

The main advantage of trading using opposite DATANG INTL and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL 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 DATANG INTL POW and Ultra Clean Holdings 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .