Correlation Between Ultra Clean and PT Bank

Can any of the company-specific risk be diversified away by investing in both Ultra Clean and PT Bank 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 PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ultra Clean Holdings and PT Bank Maybank, you can compare the effects of market volatilities on Ultra Clean and PT Bank 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 PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and PT Bank.

Diversification Opportunities for Ultra Clean and PT Bank

0.12

Correlation Coefficient

Ultra Clean  PT Bank

Average diversification

The 3 months correlation between Ultra and BOZA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank 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 Holdings are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Maybank has no effect on the direction of Ultra Clean i.e., Ultra Clean and PT Bank go up and down completely randomly.

Pair Corralation between Ultra Clean and PT Bank

Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 0.75 times more return on investment than PT Bank. However, Ultra Clean Holdings is 1.34 times less risky than PT Bank. It trades about 0.14 of its potential returns per unit of risk. PT Bank Maybank is currently generating about -0.05 per unit of risk. If you would invest  3,280  in Ultra Clean Holdings on September 17, 2024 and sell it today you would earn a total of  220.00  from holding Ultra Clean Holdings or generate 6.71% return on investment over 90 days.

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

Ultra Clean Holdings  vs.  PT Bank Maybank

Ultra Clean Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultra Clean Holdings 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ultra Clean and PT Bank

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

The idea behind Ultra Clean Holdings and PT Bank Maybank 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.