Correlation Between ULTRA CLEAN and PT Bayan

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

Diversification Opportunities for ULTRA CLEAN and PT Bayan

0.82

Correlation Coefficient

ULTRA CLEAN  PT Bayan

Very poor diversification

The 3 months correlation between ULTRA and BNB is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and PT Bayan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bayan Resources 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 PT Bayan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bayan Resources has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and PT Bayan go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and PT Bayan

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the PT Bayan. In addition to that, ULTRA CLEAN is 2.11 times more volatile than PT Bayan Resources. It trades about -0.14 of its total potential returns per unit of risk. PT Bayan Resources is currently generating about -0.07 per unit of volatility. If you would invest  119.00  in PT Bayan Resources on December 19, 2024 and sell it today you would lose (10.00) from holding PT Bayan Resources or give up 8.4% of portfolio value over 90 days.

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

ULTRA CLEAN HLDGS  vs.  PT Bayan Resources

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 fragile 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.

PT Bayan Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bayan Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with ULTRA CLEAN and PT Bayan

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

The idea behind ULTRA CLEAN HLDGS and PT Bayan Resources 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 .