Correlation Between Daqo New and Ameresco

Can any of the company-specific risk be diversified away by investing in both Daqo New and Ameresco 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 Ameresco 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 Ameresco, you can compare the effects of market volatilities on Daqo New and Ameresco 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 Ameresco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daqo New and Ameresco.

Diversification Opportunities for Daqo New and Ameresco

0.04

Correlation Coefficient

Daqo New  Ameresco

Significant diversification

The 3 months correlation between Daqo and Ameresco is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Daqo New Energy and Ameresco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameresco 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 Ameresco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameresco has no effect on the direction of Daqo New i.e., Daqo New and Ameresco go up and down completely randomly.

Pair Corralation between Daqo New and Ameresco

Allowing for the 90-day total investment horizon Daqo New Energy is expected to generate 0.58 times more return on investment than Ameresco. However, Daqo New Energy is 1.71 times less risky than Ameresco. It trades about 0.0 of its potential returns per unit of risk. Ameresco is currently generating about -0.12 per unit of risk. If you would invest  1,927  in Daqo New Energy on December 27, 2024 and sell it today you would lose (97.00) from holding Daqo New Energy or give up 5.03% 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.  Ameresco

Daqo New Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daqo New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Daqo New is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Ameresco

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ameresco has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Daqo New and Ameresco

The main advantage of trading using opposite Daqo New and Ameresco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daqo New position performs unexpectedly, Ameresco 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 Ameresco will offset losses from the drop in Ameresco's long position.

The idea behind Daqo New Energy and Ameresco 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..