Can any of the company-specific risk be diversified away by investing in both DoubleVerify Holdings and Ultra Clean 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 DoubleVerify Holdings and Ultra Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DoubleVerify Holdings and Ultra Clean Holdings, you can compare the effects of market volatilities on DoubleVerify Holdings and Ultra Clean 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 DoubleVerify Holdings with a short position of Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of DoubleVerify Holdings and Ultra Clean.
Diversification Opportunities for DoubleVerify Holdings and Ultra Clean
The 3 months correlation between DoubleVerify and Ultra is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding DoubleVerify Holdings and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean Holdings and DoubleVerify Holdings 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 DoubleVerify Holdings are associated (or correlated) with Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of DoubleVerify Holdings i.e., DoubleVerify Holdings and Ultra Clean go up and down completely randomly.
Pair Corralation between DoubleVerify Holdings and Ultra Clean
Allowing for the 90-day total investment horizon DoubleVerify Holdings is expected to generate 0.87 times more return on investment than Ultra Clean. However, DoubleVerify Holdings is 1.15 times less risky than Ultra Clean. It trades about 0.01 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about -0.15 per unit of risk. If you would invest 3,274 in DoubleVerify Holdings on September 1, 2023 and sell it today you would earn a total of 14.00 from holding DoubleVerify Holdings or generate 0.43% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in DoubleVerify Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, DoubleVerify Holdings is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Over the last 90 days Ultra Clean Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2023. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
DoubleVerify Holdings and Ultra Clean Volatility Contrast
Predicted Return Density
Pair Trading with DoubleVerify Holdings and Ultra Clean
The main advantage of trading using opposite DoubleVerify Holdings and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DoubleVerify Holdings position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.
The idea behind DoubleVerify Holdings and Ultra Clean Holdings 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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