Correlation Between First Solar and Daqo New
Can any of the company-specific risk be diversified away by investing in both First Solar 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 First Solar and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Solar and Daqo New Energy, you can compare the effects of market volatilities on First Solar 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 First Solar with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Solar and Daqo New.
Diversification Opportunities for First Solar and Daqo New
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Daqo is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding First Solar 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 First Solar 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 First Solar 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 First Solar i.e., First Solar and Daqo New go up and down completely randomly.
Pair Corralation between First Solar and Daqo New
Given the investment horizon of 90 days First Solar is expected to generate 0.84 times more return on investment than Daqo New. However, First Solar is 1.2 times less risky than Daqo New. It trades about 0.03 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.03 per unit of risk. If you would invest 15,747 in First Solar on August 27, 2024 and sell it today you would earn a total of 2,858 from holding First Solar or generate 18.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Solar vs. Daqo New Energy
Performance |
| Timeline |
| First Solar |
| Daqo New Energy |
First Solar and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Solar and Daqo New
The main advantage of trading using opposite First Solar and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Solar 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.| First Solar vs. Enphase Energy | First Solar vs. Sunrun Inc | First Solar vs. Canadian Solar | First Solar vs. SolarEdge 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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