Correlation Between ULTRA CLEAN and Infosys

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

Diversification Opportunities for ULTRA CLEAN and Infosys

0.65

Correlation Coefficient

ULTRA CLEAN  Infosys

Poor diversification

The 3 months correlation between ULTRA and Infosys is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Infosys Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infosys Limited 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 Infosys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infosys Limited has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Infosys go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Infosys

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the Infosys. In addition to that, ULTRA CLEAN is 2.57 times more volatile than Infosys Limited. It trades about -0.16 of its total potential returns per unit of risk. Infosys Limited is currently generating about -0.28 per unit of volatility. If you would invest  2,160  in Infosys Limited on December 21, 2024 and sell it today you would lose (510.00) from holding Infosys Limited or give up 23.61% of portfolio value over 90 days.

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

ULTRA CLEAN HLDGS  vs.  Infosys 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 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.

Infosys Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Infosys Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ULTRA CLEAN and Infosys

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

The idea behind ULTRA CLEAN HLDGS and Infosys 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..