Correlation Between ULTRA CLEAN and Berkeley Energia

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

Diversification Opportunities for ULTRA CLEAN and Berkeley Energia

-0.59

Correlation Coefficient

ULTRA CLEAN  Berkeley Energia

Excellent diversification

The 3 months correlation between ULTRA and Berkeley is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Berkeley Energia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkeley Energia 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 Berkeley Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkeley Energia has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Berkeley Energia go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Berkeley Energia

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the Berkeley Energia. But the stock apears to be less risky and, when comparing its historical volatility, ULTRA CLEAN HLDGS is 1.57 times less risky than Berkeley Energia. The stock trades about -0.16 of its potential returns per unit of risk. The Berkeley Energia Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19.00  in Berkeley Energia Limited on December 22, 2024 and sell it today you would earn a total of  6.00  from holding Berkeley Energia Limited or generate 31.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

ULTRA CLEAN HLDGS  vs.  Berkeley Energia Limited

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 weak 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.

Berkeley Energia

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Berkeley Energia Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Berkeley Energia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and Berkeley Energia

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

The idea behind ULTRA CLEAN HLDGS and Berkeley Energia Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.