Correlation Between Daqo New and Lam Research
Can any of the company-specific risk be diversified away by investing in both Daqo New and Lam Research 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 Daqo New and Lam Research into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daqo New Energy and Lam Research Corp, you can compare the effects of market volatilities on Daqo New and Lam Research 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 Daqo New with a short position of Lam Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Lam Research.
Diversification Opportunities for Daqo New and Lam Research
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daqo and Lam is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Lam Research Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Research Corp and Daqo New 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 Daqo New Energy are associated (or correlated) with Lam Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Research Corp has no effect on the direction of Daqo New i.e., Daqo New and Lam Research go up and down completely randomly.
Pair Corralation between Daqo New and Lam Research
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the Lam Research. In addition to that, Daqo New is 1.6 times more volatile than Lam Research Corp. It trades about -0.02 of its total potential returns per unit of risk. Lam Research Corp is currently generating about 0.05 per unit of volatility. If you would invest 4,939 in Lam Research Corp on November 1, 2024 and sell it today you would earn a total of 3,173 from holding Lam Research Corp or generate 64.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Daqo New Energy vs. Lam Research Corp
Performance |
| Timeline |
| Daqo New Energy |
| Lam Research Corp |
Daqo New and Lam Research Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and Lam Research
The main advantage of trading using opposite Daqo New and Lam Research positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Lam Research 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 Lam Research will offset losses from the drop in Lam Research's long position.| Daqo New vs. Axcelis Technologies | Daqo New vs. Kulicke and Soffa | Daqo New vs. Ultra Clean Holdings | Daqo New vs. Cohu Inc |
| Lam Research vs. Diodes Incorporated | Lam Research vs. Daqo New Energy | Lam Research vs. Micron Technology | Lam Research vs. MagnaChip Semiconductor |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Stocks Directory Find actively traded stocks across global markets | |
| Commodity Directory Find actively traded commodities issued by global exchanges |