Correlation Between Daqo New and Globalfoundries
Can any of the company-specific risk be diversified away by investing in both Daqo New and Globalfoundries 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 Globalfoundries 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 Globalfoundries, you can compare the effects of market volatilities on Daqo New and Globalfoundries 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 Globalfoundries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Globalfoundries.
Diversification Opportunities for Daqo New and Globalfoundries
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daqo and Globalfoundries is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Globalfoundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globalfoundries 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 Globalfoundries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globalfoundries has no effect on the direction of Daqo New i.e., Daqo New and Globalfoundries go up and down completely randomly.
Pair Corralation between Daqo New and Globalfoundries
Allowing for the 90-day total investment horizon Daqo New Energy is expected to generate 2.0 times more return on investment than Globalfoundries. However, Daqo New is 2.0 times more volatile than Globalfoundries. It trades about 0.08 of its potential returns per unit of risk. Globalfoundries is currently generating about 0.07 per unit of risk. If you would invest 1,505 in Daqo New Energy on September 16, 2024 and sell it today you would earn a total of 334.00 from holding Daqo New Energy or generate 22.19% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Daqo New Energy vs. Globalfoundries
Performance |
Timeline |
Daqo New Energy |
Globalfoundries |
Daqo New and Globalfoundries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Daqo New and Globalfoundries
The main advantage of trading using opposite Daqo New and Globalfoundries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Globalfoundries 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 Globalfoundries will offset losses from the drop in Globalfoundries' long position.Daqo New vs. Globalfoundries | Daqo New vs. Wisekey International Holding | Daqo New vs. Nano Labs | Daqo New vs. SemiLEDS |
Globalfoundries vs. Wisekey International Holding | Globalfoundries vs. Nano Labs | Globalfoundries vs. SemiLEDS |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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