Correlation Between Daqo New and Hannon Armstrong
Can any of the company-specific risk be diversified away by investing in both Daqo New and Hannon Armstrong 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 Hannon Armstrong 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 Hannon Armstrong Sustainable, you can compare the effects of market volatilities on Daqo New and Hannon Armstrong 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 Hannon Armstrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Hannon Armstrong.
Diversification Opportunities for Daqo New and Hannon Armstrong
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Daqo and Hannon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Hannon Armstrong Sustainable in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannon Armstrong Sus 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 Hannon Armstrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannon Armstrong Sus has no effect on the direction of Daqo New i.e., Daqo New and Hannon Armstrong go up and down completely randomly.
Pair Corralation between Daqo New and Hannon Armstrong
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the Hannon Armstrong. In addition to that, Daqo New is 1.19 times more volatile than Hannon Armstrong Sustainable. It trades about -0.03 of its total potential returns per unit of risk. Hannon Armstrong Sustainable is currently generating about 0.01 per unit of volatility. If you would invest 3,303 in Hannon Armstrong Sustainable on August 27, 2024 and sell it today you would lose (402.00) from holding Hannon Armstrong Sustainable or give up 12.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daqo New Energy vs. Hannon Armstrong Sustainable
Performance |
| Timeline |
| Daqo New Energy |
| Hannon Armstrong Sus |
Daqo New and Hannon Armstrong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and Hannon Armstrong
The main advantage of trading using opposite Daqo New and Hannon Armstrong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Hannon Armstrong 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 Hannon Armstrong will offset losses from the drop in Hannon Armstrong's long position.The idea behind Daqo New Energy and Hannon Armstrong Sustainable pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Hannon Armstrong vs. Equinix | Hannon Armstrong vs. Crown Castle | Hannon Armstrong vs. American Tower Corp | Hannon Armstrong vs. Iron Mountain Incorporated |
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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