Correlation Between Ultra Clean and Onto Innovation

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

Diversification Opportunities for Ultra Clean and Onto Innovation

0.25

Correlation Coefficient

Ultra Clean  Onto Innovation

Modest diversification

The 3 months correlation between Ultra and Onto is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Onto Innovation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onto Innovation 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 Onto Innovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onto Innovation has no effect on the direction of Ultra Clean i.e., Ultra Clean and Onto Innovation go up and down completely randomly.

Pair Corralation between Ultra Clean and Onto Innovation

Given the investment horizon of 90 days Ultra Clean Holdings is expected to under-perform the Onto Innovation. In addition to that, Ultra Clean is 1.73 times more volatile than Onto Innovation. It trades about -0.14 of its total potential returns per unit of risk. Onto Innovation is currently generating about -0.21 per unit of volatility. If you would invest  18,327  in Onto Innovation on November 28, 2024 and sell it today you would lose (3,230) from holding Onto Innovation or give up 17.62% 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.  Onto Innovation

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 March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Onto Innovation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Onto Innovation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Onto Innovation is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ultra Clean and Onto Innovation

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

The idea behind Ultra Clean Holdings and Onto Innovation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.