Correlation Between Daqo New and NextTrip
Can any of the company-specific risk be diversified away by investing in both Daqo New and NextTrip 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 NextTrip 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 NextTrip, you can compare the effects of market volatilities on Daqo New and NextTrip 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 NextTrip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and NextTrip.
Diversification Opportunities for Daqo New and NextTrip
Very good diversification
The 3 months correlation between Daqo and NextTrip is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and NextTrip in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextTrip 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 NextTrip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextTrip has no effect on the direction of Daqo New i.e., Daqo New and NextTrip go up and down completely randomly.
Pair Corralation between Daqo New and NextTrip
Allowing for the 90-day total investment horizon Daqo New Energy is expected to under-perform the NextTrip. But the stock apears to be less risky and, when comparing its historical volatility, Daqo New Energy is 2.64 times less risky than NextTrip. The stock trades about -0.02 of its potential returns per unit of risk. The NextTrip is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 976.00 in NextTrip on August 31, 2024 and sell it today you would lose (676.00) from holding NextTrip or give up 69.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Daqo New Energy vs. NextTrip
Performance |
| Timeline |
| Daqo New Energy |
| NextTrip |
Daqo New and NextTrip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daqo New and NextTrip
The main advantage of trading using opposite Daqo New and NextTrip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, NextTrip 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 NextTrip will offset losses from the drop in NextTrip's long position.| Daqo New vs. Power Integrations | Daqo New vs. Diodes Incorporated | Daqo New vs. MACOM Technology Solutions | Daqo New vs. Cirrus Logic |
| NextTrip vs. Spyre Therapeutics | NextTrip vs. Valneva SE ADR | NextTrip vs. Chiba Bank Ltd | NextTrip vs. Abcellera Biologics |
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 CEOs Directory module to screen CEOs from public companies around the world.
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