Correlation Between ULTRA CLEAN and Galaxy Entertainment

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

By analyzing existing cross correlation between ULTRA CLEAN HLDGS and Galaxy Entertainment Group, you can compare the effects of market volatilities on ULTRA CLEAN and Galaxy Entertainment 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 Galaxy Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ULTRA CLEAN and Galaxy Entertainment.

Diversification Opportunities for ULTRA CLEAN and Galaxy Entertainment

0.76

Correlation Coefficient

ULTRA CLEAN  Galaxy Entertainment

Poor diversification

The 3 months correlation between ULTRA and Galaxy is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and Galaxy Entertainment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Galaxy Entertainment 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 HLDGS are associated (or correlated) with Galaxy Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Galaxy Entertainment has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and Galaxy Entertainment go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and Galaxy Entertainment

Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 2.02 times less return on investment than Galaxy Entertainment. But when comparing it to its historical volatility, ULTRA CLEAN HLDGS is 1.39 times less risky than Galaxy Entertainment. It trades about 0.11 of its potential returns per unit of risk. Galaxy Entertainment Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  282.00  in Galaxy Entertainment Group on September 4, 2024 and sell it today you would earn a total of  144.00  from holding Galaxy Entertainment Group or generate 51.06% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  Galaxy Entertainment Group

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 unsteady technical and fundamental indicators, ULTRA CLEAN exhibited solid returns over the last few months and may actually be approaching a breakup point.

Galaxy Entertainment

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Galaxy Entertainment Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Galaxy Entertainment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ULTRA CLEAN and Galaxy Entertainment

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

The idea behind ULTRA CLEAN HLDGS and Galaxy Entertainment Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.