Correlation Between Teradyne and Daqo New
Can any of the company-specific risk be diversified away by investing in both Teradyne 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 Teradyne and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Daqo New Energy, you can compare the effects of market volatilities on Teradyne 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 Teradyne with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Daqo New.
Diversification Opportunities for Teradyne and Daqo New
Very good diversification
The 3 months correlation between Teradyne and Daqo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne 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 Teradyne 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 Teradyne 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 Teradyne i.e., Teradyne and Daqo New go up and down completely randomly.
Pair Corralation between Teradyne and Daqo New
Considering the 90-day investment horizon Teradyne is expected to under-perform the Daqo New. But the stock apears to be less risky and, when comparing its historical volatility, Teradyne is 1.59 times less risky than Daqo New. The stock trades about -0.36 of its potential returns per unit of risk. The Daqo New Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,907 in Daqo New Energy on November 18, 2024 and sell it today you would earn a total of 256.00 from holding Daqo New Energy or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teradyne vs. Daqo New Energy
Performance |
| Timeline |
| Teradyne |
| Daqo New Energy |
Teradyne and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teradyne and Daqo New
The main advantage of trading using opposite Teradyne and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne 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.| Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
| 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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