Correlation Between Veeco Instruments and Daqo New
Can any of the company-specific risk be diversified away by investing in both Veeco Instruments 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 Veeco Instruments and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veeco Instruments and Daqo New Energy, you can compare the effects of market volatilities on Veeco Instruments 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 Veeco Instruments with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veeco Instruments and Daqo New.
Diversification Opportunities for Veeco Instruments and Daqo New
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Veeco and Daqo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments 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 Veeco Instruments i.e., Veeco Instruments and Daqo New go up and down completely randomly.
Pair Corralation between Veeco Instruments and Daqo New
Given the investment horizon of 90 days Veeco Instruments is expected to generate 0.25 times more return on investment than Daqo New. However, Veeco Instruments is 3.97 times less risky than Daqo New. It trades about -0.13 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.05 per unit of risk. If you would invest 2,916 in Veeco Instruments on August 25, 2024 and sell it today you would lose (176.00) from holding Veeco Instruments or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veeco Instruments vs. Daqo New Energy
Performance |
| Timeline |
| Veeco Instruments |
| Daqo New Energy |
Veeco Instruments and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veeco Instruments and Daqo New
The main advantage of trading using opposite Veeco Instruments and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veeco Instruments 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.| Veeco Instruments vs. Teradyne | Veeco Instruments vs. Ichor Holdings | Veeco Instruments vs. Amtech Systems | Veeco Instruments vs. IPG Photonics |
| Daqo New vs. Teradyne | Daqo New vs. Ichor Holdings | Daqo New vs. Amtech Systems | Daqo New vs. Veeco Instruments |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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