Correlation Between ULTRA CLEAN and ORIX JREIT

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

Diversification Opportunities for ULTRA CLEAN and ORIX JREIT

0.32

Correlation Coefficient

ULTRA CLEAN  ORIX JREIT

Weak diversification

The 3 months correlation between ULTRA and ORIX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and ORIX JREIT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORIX JREIT INC 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 ORIX JREIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORIX JREIT INC has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and ORIX JREIT go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and ORIX JREIT

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 2.07 times more return on investment than ORIX JREIT. However, ULTRA CLEAN is 2.07 times more volatile than ORIX JREIT INC. It trades about 0.03 of its potential returns per unit of risk. ORIX JREIT INC is currently generating about -0.03 per unit of risk. If you would invest  3,105  in ULTRA CLEAN HLDGS on September 20, 2024 and sell it today you would earn a total of  575.00  from holding ULTRA CLEAN HLDGS or generate 18.52% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  ORIX JREIT INC

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 8 (%) 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.

ORIX JREIT INC

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ORIX JREIT INC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ORIX JREIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ULTRA CLEAN and ORIX JREIT

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

The idea behind ULTRA CLEAN HLDGS and ORIX JREIT INC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.