Correlation Between Ultra Clean and Intelligent Bio

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

Diversification Opportunities for Ultra Clean and Intelligent Bio

0.34

Correlation Coefficient

Ultra Clean  Intelligent Bio

Weak diversification

The 3 months correlation between Ultra and Intelligent is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Intelligent Bio Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intelligent Bio Solutions 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 Intelligent Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intelligent Bio Solutions has no effect on the direction of Ultra Clean i.e., Ultra Clean and Intelligent Bio go up and down completely randomly.

Pair Corralation between Ultra Clean and Intelligent Bio

Given the investment horizon of 90 days Ultra Clean is expected to generate 3.01 times less return on investment than Intelligent Bio. But when comparing it to its historical volatility, Ultra Clean Holdings is 6.64 times less risky than Intelligent Bio. It trades about 0.03 of its potential returns per unit of risk. Intelligent Bio Solutions is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  6,288  in Intelligent Bio Solutions on October 11, 2024 and sell it today you would lose (6,147) from holding Intelligent Bio Solutions or give up 97.76% of portfolio value over 90 days.

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

Ultra Clean Holdings  vs.  Intelligent Bio Solutions

Ultra Clean Holdings

Risk-Adjusted Performance

0 of 100

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.

Intelligent Bio Solutions

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Intelligent Bio Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Intelligent Bio is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ultra Clean and Intelligent Bio

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

The idea behind Ultra Clean Holdings and Intelligent Bio Solutions 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.