Correlation Between Daqo New and ScanSource
Can any of the company-specific risk be diversified away by investing in both Daqo New and ScanSource 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 ScanSource 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 ScanSource, you can compare the effects of market volatilities on Daqo New and ScanSource 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 ScanSource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and ScanSource.
Diversification Opportunities for Daqo New and ScanSource
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daqo and ScanSource is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Daqo New i.e., Daqo New and ScanSource go up and down completely randomly.
Pair Corralation between Daqo New and ScanSource
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the ScanSource. In addition to that, Daqo New is 2.61 times more volatile than ScanSource. It trades about -0.03 of its total potential returns per unit of risk. ScanSource is currently generating about 0.09 per unit of volatility. If you would invest 4,938 in ScanSource on September 19, 2024 and sell it today you would earn a total of 164.00 from holding ScanSource or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daqo New Energy vs. ScanSource
Performance |
| Timeline |
| Daqo New Energy |
| ScanSource |
Daqo New and ScanSource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and ScanSource
The main advantage of trading using opposite Daqo New and ScanSource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, ScanSource 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 ScanSource will offset losses from the drop in ScanSource'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 |
| ScanSource vs. Climb Global Solutions | ScanSource vs. Insight Enterprises | ScanSource vs. Synnex | ScanSource vs. PC Connection |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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