Correlation Between ULTRA CLEAN and Axfood AB

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

Diversification Opportunities for ULTRA CLEAN and Axfood AB

-0.43

Correlation Coefficient

ULTRA CLEAN  Axfood AB

Very good diversification

The 3 months correlation between ULTRA and Axfood is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Axfood AB go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Axfood AB

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the Axfood AB. In addition to that, ULTRA CLEAN is 2.43 times more volatile than Axfood AB. It trades about -0.16 of its total potential returns per unit of risk. Axfood AB is currently generating about 0.05 per unit of volatility. If you would invest  1,963  in Axfood AB on December 23, 2024 and sell it today you would earn a total of  90.00  from holding Axfood AB or generate 4.58% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  Axfood AB

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.

Axfood AB

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axfood AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Axfood AB is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ULTRA CLEAN and Axfood AB

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

The idea behind ULTRA CLEAN HLDGS and Axfood AB 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .