Correlation Between Ultra Clean and NI Holdings

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

Diversification Opportunities for Ultra Clean and NI Holdings

0.57

Correlation Coefficient

Ultra Clean  NI Holdings

Very weak diversification

The 3 months correlation between Ultra and NODK is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings 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 NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Ultra Clean i.e., Ultra Clean and NI Holdings go up and down completely randomly.

Pair Corralation between Ultra Clean and NI Holdings

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the NI Holdings. In addition to that, Ultra Clean is 3.09 times more volatile than NI Holdings. It trades about -0.1 of its total potential returns per unit of risk. NI Holdings is currently generating about -0.13 per unit of volatility. If you would invest  1,578  in NI Holdings on December 18, 2024 and sell it today you would lose (186.00) from holding NI Holdings or give up 11.79% of portfolio value over 90 days.

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

Ultra Clean Holdings  vs.  NI Holdings

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.

NI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ultra Clean and NI Holdings

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

The idea behind Ultra Clean Holdings and NI Holdings 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.