Correlation Between ULTRA CLEAN and NTG Nordic

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

Diversification Opportunities for ULTRA CLEAN and NTG Nordic

0.51

Correlation Coefficient

ULTRA CLEAN  NTG Nordic

Very weak diversification

The 3 months correlation between ULTRA and NTG is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding ULTRA CLEAN HLDGS and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of ULTRA CLEAN i.e., ULTRA CLEAN and NTG Nordic go up and down completely randomly.

Pair Corralation between ULTRA CLEAN and NTG Nordic

Assuming the 90 days trading horizon ULTRA CLEAN HLDGS is expected to generate 1.61 times more return on investment than NTG Nordic. However, ULTRA CLEAN is 1.61 times more volatile than NTG Nordic Transport. It trades about -0.07 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.22 per unit of risk. If you would invest  2,260  in ULTRA CLEAN HLDGS on March 25, 2025 and sell it today you would lose (530.00) from holding ULTRA CLEAN HLDGS or give up 23.45% of portfolio value over 90 days.

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

ULTRA CLEAN HLDGS  vs.  NTG Nordic Transport

ULTRA CLEAN HLDGS

Risk-Adjusted Performance

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 fragile performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in July 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

NTG Nordic Transport

Risk-Adjusted Performance

Very Weak

Over the last 90 days NTG Nordic Transport has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ULTRA CLEAN and NTG Nordic

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

The idea behind ULTRA CLEAN HLDGS and NTG Nordic Transport 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.