Correlation Between Micron Technology and Daqo New
Can any of the company-specific risk be diversified away by investing in both Micron 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 Micron 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 Micron Technology and Daqo New Energy, you can compare the effects of market volatilities on Micron 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 Micron Technology with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micron Technology and Daqo New.
Diversification Opportunities for Micron Technology and Daqo New
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Micron and Daqo is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Micron Technology 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 Micron 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 Micron Technology 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 Micron Technology i.e., Micron Technology and Daqo New go up and down completely randomly.
Pair Corralation between Micron Technology and Daqo New
Allowing for the 90-day total investment horizon Micron Technology is expected to generate 0.64 times more return on investment than Daqo New. However, Micron Technology is 1.56 times less risky than Daqo New. It trades about 0.05 of its potential returns per unit of risk. Daqo New Energy is currently generating about 0.0 per unit of risk. If you would invest 7,261 in Micron Technology on September 1, 2024 and sell it today you would earn a total of 2,534 from holding Micron Technology or generate 34.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Micron Technology vs. Daqo New Energy
Performance |
| Timeline |
| Micron Technology |
| Daqo New Energy |
Micron Technology and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micron Technology and Daqo New
The main advantage of trading using opposite Micron Technology and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micron 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.| Micron Technology vs. NXP Semiconductors NV | Micron Technology vs. GSI Technology | Micron Technology vs. MaxLinear | Micron 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 CEOs Directory module to screen CEOs from public companies around the world.
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