Correlation Between Ultra Clean and Fortress Transp

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

Diversification Opportunities for Ultra Clean and Fortress Transp

0.23

Correlation Coefficient

Ultra Clean  Fortress Transp

Modest diversification

The 3 months correlation between Ultra and Fortress is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra 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 Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of Ultra Clean i.e., Ultra Clean and Fortress Transp go up and down completely randomly.

Pair Corralation between Ultra Clean and Fortress Transp

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Fortress Transp. But the stock apears to be less risky and, when comparing its historical volatility, Ultra Clean Holdings is 1.23 times less risky than Fortress Transp. The stock trades about -0.03 of its potential returns per unit of risk. The Fortress Transp Infra is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  13,988  in Fortress Transp Infra on October 4, 2024 and sell it today you would earn a total of  416.00  from holding Fortress Transp Infra or generate 2.97% 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 Holdings  vs.  Fortress Transp Infra

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. In spite of comparatively stable basic indicators, Ultra Clean is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Fortress Transp Infra

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Transp Infra are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Fortress Transp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ultra Clean and Fortress Transp

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

The idea behind Ultra Clean Holdings and Fortress Transp Infra 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.