Correlation Between Desktop Metal and Daqo New
Can any of the company-specific risk be diversified away by investing in both Desktop Metal 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 Desktop Metal and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desktop Metal and Daqo New Energy, you can compare the effects of market volatilities on Desktop Metal 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 Desktop Metal with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desktop Metal and Daqo New.
Diversification Opportunities for Desktop Metal and Daqo New
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Desktop and Daqo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal 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 Desktop Metal 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 Desktop Metal 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 Desktop Metal i.e., Desktop Metal and Daqo New go up and down completely randomly.
Pair Corralation between Desktop Metal and Daqo New
Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 0.77 times more return on investment than Daqo New. However, Desktop Metal is 1.3 times less risky than Daqo New. It trades about -0.09 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.3 per unit of risk. If you would invest 492.00 in Desktop Metal on August 27, 2024 and sell it today you would lose (50.00) from holding Desktop Metal or give up 10.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Desktop Metal vs. Daqo New Energy
Performance |
| Timeline |
| Desktop Metal |
| Daqo New Energy |
Desktop Metal and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desktop Metal and Daqo New
The main advantage of trading using opposite Desktop Metal and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desktop Metal 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.| Desktop Metal vs. Plexus Corp | Desktop Metal vs. Jabil Circuit | Desktop Metal vs. Sanmina | Desktop Metal vs. Methode Electronics |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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