Correlation Between Nano Labs and Daqo New

Can any of the company-specific risk be diversified away by investing in both Nano Labs 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 Nano Labs and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nano Labs and Daqo New Energy, you can compare the effects of market volatilities on Nano Labs 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 Nano Labs with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nano Labs and Daqo New.

Diversification Opportunities for Nano Labs and Daqo New

-0.21

Correlation Coefficient

Nano Labs  Daqo New

Very good diversification

The 3 months correlation between Nano and Daqo is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nano Labs 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 Nano Labs 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 Nano Labs 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 Nano Labs i.e., Nano Labs and Daqo New go up and down completely randomly.

Pair Corralation between Nano Labs and Daqo New

Allowing for the 90-day total investment horizon Nano Labs is expected to under-perform the Daqo New. In addition to that, Nano Labs is 1.65 times more volatile than Daqo New Energy. It trades about -0.14 of its total potential returns per unit of risk. Daqo New Energy is currently generating about 0.0 per unit of volatility. If you would invest  1,920  in Daqo New Energy on December 24, 2024 and sell it today you would lose (63.00) from holding Daqo New Energy or give up 3.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nano Labs  vs.  Daqo New Energy

Nano Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nano Labs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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.

Pair Trading with Nano Labs and Daqo New

The main advantage of trading using opposite Nano Labs and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nano Labs 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.

The idea behind Nano Labs and Daqo New Energy 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.