Correlation Between Diodes Incorporated and Daqo New
Can any of the company-specific risk be diversified away by investing in both Diodes Incorporated and Daqo New 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 Diodes Incorporated and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diodes Incorporated and Daqo New Energy, you can compare the effects of market volatilities on Diodes Incorporated and Daqo New 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 Diodes Incorporated with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diodes Incorporated and Daqo New.
Diversification Opportunities for Diodes Incorporated and Daqo New
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diodes and Daqo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Daqo New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daqo New Energy and Diodes Incorporated 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 Diodes Incorporated are associated (or correlated) with Daqo New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daqo New Energy has no effect on the direction of Diodes Incorporated i.e., Diodes Incorporated and Daqo New go up and down completely randomly.
Pair Corralation between Diodes Incorporated and Daqo New
Given the investment horizon of 90 days Diodes Incorporated is expected to generate 0.63 times more return on investment than Daqo New. However, Diodes Incorporated is 1.6 times less risky than Daqo New. It trades about 0.07 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.3 per unit of risk. If you would invest 6,350 in Diodes Incorporated on August 27, 2024 and sell it today you would earn a total of 280.00 from holding Diodes Incorporated or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diodes Incorporated vs. Daqo New Energy
Performance |
| Timeline |
| Diodes Incorporated |
| Daqo New Energy |
Diodes Incorporated and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diodes Incorporated and Daqo New
The main advantage of trading using opposite Diodes Incorporated and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diodes Incorporated position performs unexpectedly, Daqo New 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 Daqo New will offset losses from the drop in Daqo New's long position.| Diodes Incorporated vs. Silicon Laboratories | Diodes Incorporated vs. MACOM Technology Solutions | Diodes Incorporated vs. FormFactor | Diodes Incorporated vs. Amkor Technology |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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