Correlation Between Sony Group and ULTRA CLEAN

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

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

Diversification Opportunities for Sony Group and ULTRA CLEAN

0.51

Correlation Coefficient

Sony Group  ULTRA CLEAN

Very weak diversification

The 3 months correlation between Sony and ULTRA is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sony Group 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 Sony Group 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 Sony Group 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 Sony Group i.e., Sony Group and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between Sony Group and ULTRA CLEAN

Assuming the 90 days trading horizon Sony Group is expected to generate 1.28 times less return on investment than ULTRA CLEAN. In addition to that, Sony Group is 1.45 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.09 of its total potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.17 per unit of volatility. If you would invest  3,520  in ULTRA CLEAN HLDGS on October 11, 2024 and sell it today you would earn a total of  240.00  from holding ULTRA CLEAN HLDGS or generate 6.82% return on investment over 90 days.

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

Sony Group  vs.  ULTRA CLEAN HLDGS

Sony Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sony Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Sony Group reported solid returns over the last few months and may actually be approaching a breakup point.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ULTRA CLEAN may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sony Group and ULTRA CLEAN

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