Correlation Between Aduro Clean and Ultra Clean

Can any of the company-specific risk be diversified away by investing in both Aduro Clean 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 Aduro Clean and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aduro Clean Technologies and Ultra Clean Holdings, you can compare the effects of market volatilities on Aduro Clean 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 Aduro Clean with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aduro Clean and Ultra Clean.

Diversification Opportunities for Aduro Clean and Ultra Clean

0.0

Correlation Coefficient

Aduro Clean  Ultra Clean

Pay attention - limited upside

The 3 months correlation between Aduro and Ultra is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aduro Clean Technologies and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings and Aduro 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 Aduro Clean Technologies 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 Holdings has no effect on the direction of Aduro Clean i.e., Aduro Clean and Ultra Clean go up and down completely randomly.

Pair Corralation between Aduro Clean and Ultra Clean

Given the investment horizon of 90 days Aduro Clean Technologies is expected to generate 1.63 times more return on investment than Ultra Clean. However, Aduro Clean is 1.63 times more volatile than Ultra Clean Holdings. It trades about 0.14 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.03 per unit of risk. If you would invest  455.00  in Aduro Clean Technologies on September 28, 2024 and sell it today you would earn a total of  114.00  from holding Aduro Clean Technologies or generate 25.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	60.32%
Values	Daily Returns

Aduro Clean Technologies  vs.  Ultra Clean Holdings

Aduro Clean Technologies

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aduro Clean Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Aduro Clean reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Aduro Clean and Ultra Clean

The main advantage of trading using opposite Aduro Clean and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aduro Clean 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 Aduro Clean Technologies and Ultra Clean 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.