Correlation Between Ultra Clean and DONGJIANG ENVIRONMENTAL

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

Diversification Opportunities for Ultra Clean and DONGJIANG ENVIRONMENTAL

-0.45

Correlation Coefficient

Ultra Clean  DONGJIANG ENVIRONMENTAL

Very good diversification

The 3 months correlation between Ultra and DONGJIANG is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of Ultra Clean i.e., Ultra Clean and DONGJIANG ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between Ultra Clean and DONGJIANG ENVIRONMENTAL

Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 0.63 times more return on investment than DONGJIANG ENVIRONMENTAL. However, Ultra Clean Holdings is 1.58 times less risky than DONGJIANG ENVIRONMENTAL. It trades about 0.03 of its potential returns per unit of risk. DONGJIANG ENVIRONMENTAL H is currently generating about 0.01 per unit of risk. If you would invest  2,901  in Ultra Clean Holdings on October 11, 2024 and sell it today you would earn a total of  799.00  from holding Ultra Clean Holdings or generate 27.54% return on investment over 90 days.

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

Ultra Clean Holdings  vs.  DONGJIANG ENVIRONMENTAL H

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 February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONGJIANG ENVIRONMENTAL H has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL

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

The idea behind Ultra Clean Holdings and DONGJIANG ENVIRONMENTAL H 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.