Correlation Between Sonida Senior and Ultra Clean

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

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

Diversification Opportunities for Sonida Senior and Ultra Clean

0.0

Correlation Coefficient

Sonida Senior  Ultra Clean

Pay attention - limited upside

The 3 months correlation between Sonida and Ultra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living 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 Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and Ultra Clean go up and down completely randomly.

Pair Corralation between Sonida Senior and Ultra Clean

Given the investment horizon of 90 days Sonida Senior is expected to generate 1.75 times less return on investment than Ultra Clean. In addition to that, Sonida Senior is 1.09 times more volatile than Ultra Clean Holdings. It trades about 0.08 of its total potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.15 per unit of volatility. If you would invest  3,649  in Ultra Clean Holdings on October 25, 2024 and sell it today you would earn a total of  195.00  from holding Ultra Clean Holdings or generate 5.34% return on investment over 90 days.

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

Sonida Senior Living  vs.  Ultra Clean Holdings

Sonida Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sonida Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Sonida Senior is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ultra Clean Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ultra Clean may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sonida Senior and Ultra Clean

The main advantage of trading using opposite Sonida Senior and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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 Sonida Senior Living 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.