Correlation Between Daqo New and Photronics
Can any of the company-specific risk be diversified away by investing in both Daqo New and Photronics 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 Photronics 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 Photronics, you can compare the effects of market volatilities on Daqo New and Photronics 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 Photronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Photronics.
Diversification Opportunities for Daqo New and Photronics
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daqo and Photronics is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Photronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photronics 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 Photronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photronics has no effect on the direction of Daqo New i.e., Daqo New and Photronics go up and down completely randomly.
Pair Corralation between Daqo New and Photronics
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the Photronics. In addition to that, Daqo New is 1.44 times more volatile than Photronics. It trades about -0.02 of its total potential returns per unit of risk. Photronics is currently generating about 0.03 per unit of volatility. If you would invest 1,832 in Photronics on November 1, 2024 and sell it today you would earn a total of 472.50 from holding Photronics or generate 25.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Daqo New Energy vs. Photronics
Performance |
| Timeline |
| Daqo New Energy |
| Photronics |
Daqo New and Photronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and Photronics
The main advantage of trading using opposite Daqo New and Photronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Photronics 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 Photronics will offset losses from the drop in Photronics' long position.| Daqo New vs. Axcelis Technologies | Daqo New vs. Kulicke and Soffa | Daqo New vs. Ultra Clean Holdings | Daqo New vs. Cohu Inc |
| Photronics vs. Diodes Incorporated | Photronics vs. Daqo New Energy | Photronics vs. Micron Technology | Photronics 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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