Correlation Between Peak Resources and ULTRA CLEAN

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

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

Diversification Opportunities for Peak Resources and ULTRA CLEAN

0.63

Correlation Coefficient

Peak Resources  ULTRA CLEAN

Poor diversification

The 3 months correlation between Peak and ULTRA is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Peak Resources Limited 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 Peak Resources 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 Peak Resources Limited 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 Peak Resources i.e., Peak Resources and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Peak Resources and ULTRA CLEAN

Assuming the 90 days horizon Peak Resources Limited is expected to generate 1.88 times more return on investment than ULTRA CLEAN. However, Peak Resources is 1.88 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.01 of its potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about -0.16 per unit of risk. If you would invest  6.30  in Peak Resources Limited on December 28, 2024 and sell it today you would lose (0.80) from holding Peak Resources Limited or give up 12.7% of portfolio value over 90 days.

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

Peak Resources Limited  vs.  ULTRA CLEAN HLDGS

Peak Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peak Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Peak Resources 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 uncertain 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 Peak Resources and ULTRA CLEAN

The main advantage of trading using opposite Peak Resources and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peak Resources 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 Peak Resources Limited 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.