Correlation Between Ultra Clean and Holdco Nuvo

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

Diversification Opportunities for Ultra Clean and Holdco Nuvo

-0.31

Correlation Coefficient

Ultra Clean  Holdco Nuvo

Very good diversification

The 3 months correlation between Ultra and Holdco is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Holdco Nuvo Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holdco Nuvo Group 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 Holdco Nuvo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holdco Nuvo Group has no effect on the direction of Ultra Clean i.e., Ultra Clean and Holdco Nuvo go up and down completely randomly.

Pair Corralation between Ultra Clean and Holdco Nuvo

Given the investment horizon of 90 days Ultra Clean is expected to generate 31.64 times less return on investment than Holdco Nuvo. But when comparing it to its historical volatility, Ultra Clean Holdings is 14.63 times less risky than Holdco Nuvo. It trades about 0.05 of its potential returns per unit of risk. Holdco Nuvo Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1.19  in Holdco Nuvo Group on September 13, 2024 and sell it today you would lose (0.99) from holding Holdco Nuvo Group or give up 83.19% of portfolio value over 90 days.

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

Ultra Clean Holdings  vs.  Holdco Nuvo Group

Ultra Clean Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ultra Clean may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Holdco Nuvo Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Holdco Nuvo Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Holdco Nuvo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultra Clean and Holdco Nuvo

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

The idea behind Ultra Clean Holdings and Holdco Nuvo 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.