Correlation Between ULTRA CLEAN and OptiNose

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

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

Diversification Opportunities for ULTRA CLEAN and OptiNose

-0.28

Correlation Coefficient

ULTRA CLEAN  OptiNose

Very good diversification

The 3 months correlation between ULTRA and OptiNose is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and OptiNose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OptiNose and ULTRA CLEAN 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 ULTRA CLEAN HLDGS are associated (or correlated) with OptiNose. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OptiNose has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and OptiNose go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and OptiNose

Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 21.35 times less return on investment than OptiNose. But when comparing it to its historical volatility, ULTRA CLEAN HLDGS is 16.42 times less risky than OptiNose. It trades about 0.03 of its potential returns per unit of risk. OptiNose is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,388  in OptiNose on October 11, 2024 and sell it today you would lose (1,812) from holding OptiNose or give up 75.88% of portfolio value over 90 days.

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

ULTRA CLEAN HLDGS  vs.  OptiNose

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.

OptiNose

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in OptiNose are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, OptiNose reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and OptiNose

The main advantage of trading using opposite ULTRA CLEAN and OptiNose positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ULTRA CLEAN position performs unexpectedly, OptiNose 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 OptiNose will offset losses from the drop in OptiNose's long position.

The idea behind ULTRA CLEAN HLDGS and OptiNose 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.

Check out your portfolio center.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.