Correlation Between Daqo New and Nano Labs
Can any of the company-specific risk be diversified away by investing in both Daqo New and Nano Labs 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 Nano Labs 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 Nano Labs, you can compare the effects of market volatilities on Daqo New and Nano Labs 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 Nano Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Nano Labs.
Diversification Opportunities for Daqo New and Nano Labs
Poor diversification
The 3 months correlation between Daqo and Nano is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Nano Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Labs 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 Nano Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Labs has no effect on the direction of Daqo New i.e., Daqo New and Nano Labs go up and down completely randomly.
Pair Corralation between Daqo New and Nano Labs
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the Nano Labs. But the stock apears to be less risky and, when comparing its historical volatility, Daqo New Energy is 5.26 times less risky than Nano Labs. The stock trades about -0.16 of its potential returns per unit of risk. The Nano Labs is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 610.00 in Nano Labs on August 26, 2024 and sell it today you would earn a total of 216.00 from holding Nano Labs or generate 35.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daqo New Energy vs. Nano Labs
Performance |
| Timeline |
| Daqo New Energy |
| Nano Labs |
Daqo New and Nano Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and Nano Labs
The main advantage of trading using opposite Daqo New and Nano Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Nano Labs 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 Nano Labs will offset losses from the drop in Nano Labs' long position.The idea behind Daqo New Energy and Nano Labs 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.| Nano Labs vs. SEALSQ Corp | Nano Labs vs. GSI Technology | Nano Labs vs. SemiLEDS | Nano Labs vs. ChipMOS Technologies |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges |