Correlation Between MACOM Technology and Daqo New
Can any of the company-specific risk be diversified away by investing in both MACOM Technology 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 MACOM Technology and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MACOM Technology Solutions and Daqo New Energy, you can compare the effects of market volatilities on MACOM Technology 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 MACOM Technology with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of MACOM Technology and Daqo New.
Diversification Opportunities for MACOM Technology and Daqo New
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MACOM and Daqo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MACOM Technology Solutions 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 MACOM Technology 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 MACOM Technology Solutions 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 MACOM Technology i.e., MACOM Technology and Daqo New go up and down completely randomly.
Pair Corralation between MACOM Technology and Daqo New
Given the investment horizon of 90 days MACOM Technology Solutions is expected to generate 0.59 times more return on investment than Daqo New. However, MACOM Technology Solutions is 1.7 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 -0.02 per unit of risk. If you would invest 6,894 in MACOM Technology Solutions on September 2, 2024 and sell it today you would earn a total of 6,388 from holding MACOM Technology Solutions or generate 92.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MACOM Technology Solutions vs. Daqo New Energy
Performance |
| Timeline |
| MACOM Technology Sol |
| Daqo New Energy |
MACOM Technology and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MACOM Technology and Daqo New
The main advantage of trading using opposite MACOM Technology and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MACOM Technology 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.| MACOM Technology vs. NXP Semiconductors NV | MACOM Technology vs. GSI Technology | MACOM Technology vs. MaxLinear | MACOM Technology vs. Texas Instruments Incorporated |
| Daqo New vs. Axcelis Technologies | Daqo New vs. Kulicke and Soffa | Daqo New vs. Ultra Clean Holdings | Daqo New vs. Cohu 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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