Correlation Between Ultra Clean and Weyco

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

Diversification Opportunities for Ultra Clean and Weyco

0.07

Correlation Coefficient

Ultra Clean  Weyco

Significant diversification

The 3 months correlation between Ultra and Weyco is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco 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 Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Ultra Clean i.e., Ultra Clean and Weyco go up and down completely randomly.

Pair Corralation between Ultra Clean and Weyco

Given the investment horizon of 90 days Ultra Clean Holdings is expected to generate 1.09 times more return on investment than Weyco. However, Ultra Clean is 1.09 times more volatile than Weyco Group. It trades about 0.06 of its potential returns per unit of risk. Weyco Group is currently generating about 0.02 per unit of risk. If you would invest  3,376  in Ultra Clean Holdings on September 14, 2024 and sell it today you would earn a total of  352.00  from holding Ultra Clean Holdings or generate 10.43% return on investment over 90 days.

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

Ultra Clean Holdings  vs.  Weyco Group

Ultra Clean Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ultra Clean Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ultra Clean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Weyco Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Weyco Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Weyco is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ultra Clean and Weyco

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

The idea behind Ultra Clean Holdings and Weyco 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..