Correlation Between Cohu and Daqo New
Can any of the company-specific risk be diversified away by investing in both Cohu 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 Cohu and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cohu Inc and Daqo New Energy, you can compare the effects of market volatilities on Cohu 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 Cohu with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cohu and Daqo New.
Diversification Opportunities for Cohu and Daqo New
Very good diversification
The 3 months correlation between Cohu and Daqo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Cohu Inc 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 Cohu 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 Cohu Inc 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 Cohu i.e., Cohu and Daqo New go up and down completely randomly.
Pair Corralation between Cohu and Daqo New
Given the investment horizon of 90 days Cohu Inc is expected to generate 0.69 times more return on investment than Daqo New. However, Cohu Inc is 1.44 times less risky than Daqo New. It trades about 0.02 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.06 per unit of risk. If you would invest 2,775 in Cohu Inc on January 21, 2024 and sell it today you would earn a total of 103.00 from holding Cohu Inc or generate 3.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.78% |
Values | Daily Returns |
Cohu Inc vs. Daqo New Energy
Performance |
Timeline |
Cohu Inc |
Daqo New Energy |
Cohu and Daqo New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cohu and Daqo New
The main advantage of trading using opposite Cohu and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cohu 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.Cohu vs. Onto Innovation | Cohu vs. Photronics | Cohu vs. Ultra Clean Holdings | Cohu vs. Axcelis Technologies |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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