Correlation Between ULTRA CLEAN and SCANSOURCE

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

Diversification Opportunities for ULTRA CLEAN and SCANSOURCE

0.57

Correlation Coefficient

ULTRA CLEAN  SCANSOURCE

Very weak diversification

The 3 months correlation between ULTRA and SCANSOURCE is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE 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 SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and SCANSOURCE go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and SCANSOURCE

Assuming the 90 days trading horizon ULTRA CLEAN is expected to generate 6.22 times less return on investment than SCANSOURCE. In addition to that, ULTRA CLEAN is 1.28 times more volatile than SCANSOURCE. It trades about 0.01 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.06 per unit of volatility. If you would invest  4,260  in SCANSOURCE on September 28, 2024 and sell it today you would earn a total of  320.00  from holding SCANSOURCE or generate 7.51% return on investment over 90 days.

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

ULTRA CLEAN HLDGS  vs.  SCANSOURCE

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

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

SCANSOURCE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SCANSOURCE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, SCANSOURCE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ULTRA CLEAN and SCANSOURCE

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

The idea behind ULTRA CLEAN HLDGS and SCANSOURCE 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 Stocks Directory module to find actively traded stocks across global markets.