Correlation Between X-FAB Silicon and ULTRA CLEAN

Can any of the company-specific risk be diversified away by investing in both X-FAB Silicon and ULTRA CLEAN 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 X-FAB Silicon and ULTRA CLEAN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between X FAB Silicon Foundries and ULTRA CLEAN HLDGS, you can compare the effects of market volatilities on X-FAB Silicon and ULTRA CLEAN 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 X-FAB Silicon with a short position of ULTRA CLEAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of X-FAB Silicon and ULTRA CLEAN.

Diversification Opportunities for X-FAB Silicon and ULTRA CLEAN

0.29

Correlation Coefficient

X-FAB Silicon  ULTRA CLEAN

Modest diversification

The 3 months correlation between X-FAB and ULTRA is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding X FAB Silicon Foundries and ULTRA CLEAN HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ULTRA CLEAN HLDGS and X-FAB Silicon 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 X FAB Silicon Foundries are associated (or correlated) with ULTRA CLEAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ULTRA CLEAN HLDGS has no effect on the direction of X-FAB Silicon i.e., X-FAB Silicon and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between X-FAB Silicon and ULTRA CLEAN

Assuming the 90 days trading horizon X-FAB Silicon is expected to generate 10.55 times less return on investment than ULTRA CLEAN. In addition to that, X-FAB Silicon is 1.0 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.01 of its total potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.1 per unit of volatility. If you would invest  3,240  in ULTRA CLEAN HLDGS on October 24, 2024 and sell it today you would earn a total of  500.00  from holding ULTRA CLEAN HLDGS or generate 15.43% return on investment over 90 days.

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

X FAB Silicon Foundries  vs.  ULTRA CLEAN HLDGS

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

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

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, ULTRA CLEAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with X-FAB Silicon and ULTRA CLEAN

The main advantage of trading using opposite X-FAB Silicon and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X-FAB Silicon position performs unexpectedly, ULTRA CLEAN 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 ULTRA CLEAN will offset losses from the drop in ULTRA CLEAN's long position.

The idea behind X FAB Silicon Foundries and ULTRA CLEAN HLDGS 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..