Correlation Between Ultra Clean and Cleanaway Waste

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

By analyzing existing cross correlation between Ultra Clean Holdings and Cleanaway Waste Management, you can compare the effects of market volatilities on Ultra Clean and Cleanaway Waste 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 Cleanaway Waste. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and Cleanaway Waste.

Diversification Opportunities for Ultra Clean and Cleanaway Waste

0.28

Correlation Coefficient

Ultra Clean  Cleanaway Waste

Modest diversification

The 3 months correlation between Ultra and Cleanaway is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Cleanaway Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleanaway Waste Mana 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 Holdings are associated (or correlated) with Cleanaway Waste. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleanaway Waste Mana has no effect on the direction of Ultra Clean i.e., Ultra Clean and Cleanaway Waste go up and down completely randomly.

Pair Corralation between Ultra Clean and Cleanaway Waste

Assuming the 90 days horizon Ultra Clean Holdings is expected to under-perform the Cleanaway Waste. In addition to that, Ultra Clean is 1.92 times more volatile than Cleanaway Waste Management. It trades about -0.09 of its total potential returns per unit of risk. Cleanaway Waste Management is currently generating about 0.01 per unit of volatility. If you would invest  166.00  in Cleanaway Waste Management on September 14, 2024 and sell it today you would lose (1.00) from holding Cleanaway Waste Management or give up 0.6% of portfolio value over 90 days.

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

Ultra Clean Holdings  vs.  Cleanaway Waste Management

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cleanaway Waste 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 Ultra Clean and Cleanaway Waste

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

The idea behind Ultra Clean Holdings and Cleanaway Waste Management 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.