Correlation Between ULTRA CLEAN and HOYA

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

Diversification Opportunities for ULTRA CLEAN and HOYA

0.62

Correlation Coefficient

ULTRA CLEAN  HOYA

Poor diversification

The 3 months correlation between ULTRA and HOYA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and HOYA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOYA 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 HOYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOYA has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and HOYA go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and HOYA

Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 2.88 times less return on investment than HOYA. But when comparing it to its historical volatility, ULTRA CLEAN HLDGS is 1.97 times less risky than HOYA. It trades about 0.09 of its potential returns per unit of risk. HOYA Corporation is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  7,991  in HOYA Corporation on September 13, 2024 and sell it today you would earn a total of  4,654  from holding HOYA Corporation or generate 58.24% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  HOYA Corp.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ULTRA CLEAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

HOYA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HOYA Corporation are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, HOYA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and HOYA

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

The idea behind ULTRA CLEAN HLDGS and HOYA Corporation 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..