Correlation Between Wisekey International and Daqo New

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

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

Diversification Opportunities for Wisekey International and Daqo New

-0.14

Correlation Coefficient

Wisekey International  Daqo New

Good diversification

The 3 months correlation between Wisekey and Daqo is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding 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 Wisekey International 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 Wisekey International Holding 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 Wisekey International i.e., Wisekey International and Daqo New go up and down completely randomly.

Pair Corralation between Wisekey International and Daqo New

Given the investment horizon of 90 days Wisekey International Holding is expected to under-perform the Daqo New. In addition to that, Wisekey International is 2.92 times more volatile than Daqo New Energy. It trades about -0.1 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  1,937  in Daqo New Energy on December 26, 2024 and sell it today you would lose (75.00) from holding Daqo New Energy or give up 3.87% of portfolio value over 90 days.

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

Wisekey International Holding  vs.  Daqo New Energy

Wisekey International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wisekey International Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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 company 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 Wisekey International and Daqo New

The main advantage of trading using opposite Wisekey International and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisekey International 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 Wisekey International Holding 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.