Correlation Between ULTRA CLEAN and MUTUIONLINE

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

Diversification Opportunities for ULTRA CLEAN and MUTUIONLINE

0.03

Correlation Coefficient

ULTRA CLEAN  MUTUIONLINE

Significant diversification

The 3 months correlation between ULTRA and MUTUIONLINE is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and MUTUIONLINE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MUTUIONLINE 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 MUTUIONLINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MUTUIONLINE has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and MUTUIONLINE go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and MUTUIONLINE

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the MUTUIONLINE. In addition to that, ULTRA CLEAN is 1.68 times more volatile than MUTUIONLINE. It trades about -0.18 of its total potential returns per unit of risk. MUTUIONLINE is currently generating about 0.08 per unit of volatility. If you would invest  3,690  in MUTUIONLINE on December 30, 2024 and sell it today you would earn a total of  395.00  from holding MUTUIONLINE or generate 10.7% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  MUTUIONLINE

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.

MUTUIONLINE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MUTUIONLINE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile essential indicators, MUTUIONLINE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with ULTRA CLEAN and MUTUIONLINE

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

The idea behind ULTRA CLEAN HLDGS and MUTUIONLINE 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.