Correlation Between Ultra Clean and CleanGo Innovations

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

Diversification Opportunities for Ultra Clean and CleanGo Innovations

0.28

Correlation Coefficient

Ultra Clean  CleanGo Innovations

Modest diversification

The 3 months correlation between Ultra and CleanGo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and CleanGo Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CleanGo Innovations 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 CleanGo Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CleanGo Innovations has no effect on the direction of Ultra Clean i.e., Ultra Clean and CleanGo Innovations go up and down completely randomly.

Pair Corralation between Ultra Clean and CleanGo Innovations

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the CleanGo Innovations. But the stock apears to be less risky and, when comparing its historical volatility, Ultra Clean Holdings is 8.0 times less risky than CleanGo Innovations. The stock trades about -0.09 of its potential returns per unit of risk. The CleanGo Innovations is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  32.00  in CleanGo Innovations on December 20, 2024 and sell it today you would lose (20.00) from holding CleanGo Innovations or give up 62.5% of portfolio value over 90 days.

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

Ultra Clean Holdings  vs.  CleanGo Innovations

Ultra Clean Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultra Clean Holdings 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

CleanGo Innovations

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CleanGo Innovations are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, CleanGo Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultra Clean and CleanGo Innovations

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

The idea behind Ultra Clean Holdings and CleanGo Innovations 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.

Check out your portfolio center.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.