Correlation Between ULTRA CLEAN and Delta Electronics

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

Diversification Opportunities for ULTRA CLEAN and Delta Electronics

0.73

Correlation Coefficient

ULTRA CLEAN  Delta Electronics

Poor diversification

The 3 months correlation between ULTRA and Delta is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Delta Electronics Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delta Electronics Public 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 Delta Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delta Electronics Public has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Delta Electronics go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Delta Electronics

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 0.74 times more return on investment than Delta Electronics. However, ULTRA CLEAN HLDGS is 1.35 times less risky than Delta Electronics. It trades about -0.13 of its potential returns per unit of risk. Delta Electronics Public is currently generating about -0.22 per unit of risk. If you would invest  3,360  in ULTRA CLEAN HLDGS on December 20, 2024 and sell it today you would lose (1,060) from holding ULTRA CLEAN HLDGS or give up 31.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

ULTRA CLEAN HLDGS  vs.  Delta Electronics Public

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.

Delta Electronics Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Delta Electronics Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ULTRA CLEAN and Delta Electronics

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

The idea behind ULTRA CLEAN HLDGS and Delta Electronics Public 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.