Correlation Between Hannon Armstrong and Daqo New
Can any of the company-specific risk be diversified away by investing in both Hannon Armstrong 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 Hannon Armstrong and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hannon Armstrong Sustainable and Daqo New Energy, you can compare the effects of market volatilities on Hannon Armstrong 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 Hannon Armstrong with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hannon Armstrong and Daqo New.
Diversification Opportunities for Hannon Armstrong and Daqo New
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hannon and Daqo is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Hannon Armstrong Sustainable 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 Hannon Armstrong 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 Hannon Armstrong Sustainable 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 Hannon Armstrong i.e., Hannon Armstrong and Daqo New go up and down completely randomly.
Pair Corralation between Hannon Armstrong and Daqo New
Given the investment horizon of 90 days Hannon Armstrong Sustainable is expected to under-perform the Daqo New. But the stock apears to be less risky and, when comparing its historical volatility, Hannon Armstrong Sustainable is 1.05 times less risky than Daqo New. The stock trades about -0.11 of its potential returns per unit of risk. The Daqo New Energy is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 2,226 in Daqo New Energy on August 31, 2024 and sell it today you would lose (207.00) from holding Daqo New Energy or give up 9.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hannon Armstrong Sustainable vs. Daqo New Energy
Performance |
| Timeline |
| Hannon Armstrong Sus |
| Daqo New Energy |
Hannon Armstrong and Daqo New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hannon Armstrong and Daqo New
The main advantage of trading using opposite Hannon Armstrong and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hannon Armstrong 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.| Hannon Armstrong vs. Equinix | Hannon Armstrong vs. Crown Castle | Hannon Armstrong vs. American Tower Corp | Hannon Armstrong vs. Iron Mountain Incorporated |
| Daqo New vs. Power Integrations | Daqo New vs. Diodes Incorporated | Daqo New vs. MACOM Technology Solutions | Daqo New vs. Cirrus Logic |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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