Correlation Between ULTRA CLEAN and DFDS A/S

Can any of the company-specific risk be diversified away by investing in both ULTRA CLEAN and DFDS A/S 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 DFDS A/S 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 DFDS AS, you can compare the effects of market volatilities on ULTRA CLEAN and DFDS A/S 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 DFDS A/S. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and DFDS A/S.

Diversification Opportunities for ULTRA CLEAN and DFDS A/S

0.01

Correlation Coefficient

ULTRA CLEAN  DFDS A/S

Significant diversification

The 3 months correlation between ULTRA and DFDS is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and DFDS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DFDS A/S 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 DFDS A/S. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DFDS A/S has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and DFDS A/S go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and DFDS A/S

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 1.23 times more return on investment than DFDS A/S. However, ULTRA CLEAN is 1.23 times more volatile than DFDS AS. It trades about 0.02 of its potential returns per unit of risk. DFDS AS is currently generating about -0.02 per unit of risk. If you would invest  3,036  in ULTRA CLEAN HLDGS on October 4, 2024 and sell it today you would earn a total of  404.00  from holding ULTRA CLEAN HLDGS or generate 13.31% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  DFDS AS

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

0 of 100

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 rather sound technical and fundamental indicators, ULTRA CLEAN is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

DFDS A/S

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DFDS AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ULTRA CLEAN and DFDS A/S

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

The idea behind ULTRA CLEAN HLDGS and DFDS AS 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.