Correlation Between DONGJIANG ENVIRONMENTAL and Ultra Clean

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

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

Diversification Opportunities for DONGJIANG ENVIRONMENTAL and Ultra Clean

-0.45

Correlation Coefficient

DONGJIANG ENVIRONMENTAL  Ultra Clean

Very good diversification

The 3 months correlation between DONGJIANG and Ultra is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding DONGJIANG ENVIRONMENTAL H 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 DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H 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 DONGJIANG ENVIRONMENTAL i.e., DONGJIANG ENVIRONMENTAL and Ultra Clean go up and down completely randomly.

Pair Corralation between DONGJIANG ENVIRONMENTAL and Ultra Clean

Assuming the 90 days horizon DONGJIANG ENVIRONMENTAL is expected to generate 1.84 times less return on investment than Ultra Clean. In addition to that, DONGJIANG ENVIRONMENTAL is 1.58 times more volatile than Ultra Clean Holdings. It trades about 0.01 of its total potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.03 per unit of volatility. If you would invest  2,901  in Ultra Clean Holdings on October 11, 2024 and sell it today you would earn a total of  799.00  from holding Ultra Clean Holdings or generate 27.54% return on investment over 90 days.

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

DONGJIANG ENVIRONMENTAL H  vs.  Ultra Clean Holdings

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONGJIANG ENVIRONMENTAL H has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DONGJIANG ENVIRONMENTAL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Ultra Clean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultra Clean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Pair Trading with DONGJIANG ENVIRONMENTAL and Ultra Clean

The main advantage of trading using opposite DONGJIANG ENVIRONMENTAL and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.