Correlation Between Daqo New and United Microelectronics
Can any of the company-specific risk be diversified away by investing in both Daqo New and United Microelectronics 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 United Microelectronics 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 United Microelectronics, you can compare the effects of market volatilities on Daqo New and United Microelectronics 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 United Microelectronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and United Microelectronics.
Diversification Opportunities for Daqo New and United Microelectronics
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daqo and United is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and United Microelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Microelectronics 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 United Microelectronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Microelectronics has no effect on the direction of Daqo New i.e., Daqo New and United Microelectronics go up and down completely randomly.
Pair Corralation between Daqo New and United Microelectronics
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the United Microelectronics. In addition to that, Daqo New is 2.12 times more volatile than United Microelectronics. It trades about -0.02 of its total potential returns per unit of risk. United Microelectronics is currently generating about 0.02 per unit of volatility. If you would invest 583.00 in United Microelectronics on September 24, 2024 and sell it today you would earn a total of 90.00 from holding United Microelectronics or generate 15.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daqo New Energy vs. United Microelectronics
Performance |
| Timeline |
| Daqo New Energy |
| United Microelectronics |
Daqo New and United Microelectronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and United Microelectronics
The main advantage of trading using opposite Daqo New and United Microelectronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, United Microelectronics 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 United Microelectronics will offset losses from the drop in United Microelectronics' long position.| Daqo New vs. Axcelis Technologies | Daqo New vs. Kulicke and Soffa | Daqo New vs. Ultra Clean Holdings | Daqo New vs. Cohu Inc |
| United Microelectronics vs. Diodes Incorporated | United Microelectronics vs. Daqo New Energy | United Microelectronics vs. Nano Labs | United Microelectronics vs. Impinj Inc |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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