Correlation Between CPU SOFTWAREHOUSE and ULTRA CLEAN

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

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

Diversification Opportunities for CPU SOFTWAREHOUSE and ULTRA CLEAN

-0.13

Correlation Coefficient

CPU SOFTWAREHOUSE  ULTRA CLEAN

Good diversification

The 3 months correlation between CPU and ULTRA is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE i.e., CPU SOFTWAREHOUSE and ULTRA CLEAN go up and down completely randomly.

Pair Corralation between CPU SOFTWAREHOUSE and ULTRA CLEAN

Assuming the 90 days trading horizon CPU SOFTWAREHOUSE is expected to generate 4.18 times less return on investment than ULTRA CLEAN. In addition to that, CPU SOFTWAREHOUSE is 2.27 times more volatile than ULTRA CLEAN HLDGS. It trades about 0.02 of its total potential returns per unit of risk. ULTRA CLEAN HLDGS is currently generating about 0.17 per unit of volatility. If you would invest  3,320  in ULTRA CLEAN HLDGS on September 20, 2024 and sell it today you would earn a total of  360.00  from holding ULTRA CLEAN HLDGS or generate 10.84% return on investment over 90 days.

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

CPU SOFTWAREHOUSE  vs.  ULTRA CLEAN HLDGS

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CPU SOFTWAREHOUSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, CPU SOFTWAREHOUSE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ULTRA CLEAN HLDGS are ranked lower than 8 (%) 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 CPU SOFTWAREHOUSE and ULTRA CLEAN

The main advantage of trading using opposite CPU SOFTWAREHOUSE and ULTRA CLEAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.