Correlation Between ULTRA CLEAN and TOTAL GABON

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

Diversification Opportunities for ULTRA CLEAN and TOTAL GABON

-0.37

Correlation Coefficient

ULTRA CLEAN  TOTAL GABON

Very good diversification

The 3 months correlation between ULTRA and TOTAL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and TOTAL GABON go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and TOTAL GABON

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to under-perform the TOTAL GABON. But the stock apears to be less risky and, when comparing its historical volatility, ULTRA CLEAN HLDGS is 1.35 times less risky than TOTAL GABON. The stock trades about -0.19 of its potential returns per unit of risk. The TOTAL GABON is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  11,748  in TOTAL GABON on December 29, 2024 and sell it today you would earn a total of  7,202  from holding TOTAL GABON or generate 61.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

ULTRA CLEAN HLDGS  vs.  TOTAL GABON

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.

TOTAL GABON

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and TOTAL GABON

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

The idea behind ULTRA CLEAN HLDGS and TOTAL GABON 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.