Correlation Between GSI Technology and Ultra Clean

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

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

Diversification Opportunities for GSI Technology and Ultra Clean

0.78

Correlation Coefficient

GSI Technology  Ultra Clean

Poor diversification

The 3 months correlation between GSI and Ultra is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding GSI Technology 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 GSI Technology 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 GSI Technology 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 GSI Technology i.e., GSI Technology and Ultra Clean go up and down completely randomly.

Pair Corralation between GSI Technology and Ultra Clean

Given the investment horizon of 90 days GSI Technology is expected to generate 1.57 times more return on investment than Ultra Clean. However, GSI Technology is 1.57 times more volatile than Ultra Clean Holdings. It trades about -0.03 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.13 per unit of risk. If you would invest  305.00  in GSI Technology on December 27, 2024 and sell it today you would lose (80.00) from holding GSI Technology or give up 26.23% of portfolio value over 90 days.

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

GSI Technology  vs.  Ultra Clean Holdings

GSI Technology

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSI Technology 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 forward 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 Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultra Clean Holdings 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.

Pair Trading with GSI Technology and Ultra Clean

The main advantage of trading using opposite GSI Technology and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GSI Technology 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 GSI Technology 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.