Correlation Between Sunrun and Daqo New

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Can any of the company-specific risk be diversified away by investing in both Sunrun 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 Sunrun and Daqo New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunrun Inc and Daqo New Energy, you can compare the effects of market volatilities on Sunrun 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 Sunrun with a short position of Daqo New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunrun and Daqo New.

Diversification Opportunities for Sunrun and Daqo New

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Sunrun and Daqo New is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sunrun Inc 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 Sunrun 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 Sunrun Inc 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 Sunrun i.e., Sunrun and Daqo New go up and down completely randomly.

Pair Corralation between Sunrun and Daqo New

Considering the 90-day investment horizon Sunrun Inc is expected to generate 1.51 times more return on investment than Daqo New. However, Sunrun is 1.51 times more volatile than Daqo New Energy. It trades about 0.18 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.05 per unit of risk. If you would invest  2,314  in Sunrun Inc on September 8, 2022 and sell it today you would earn a total of  556.00  from holding Sunrun Inc or generate 24.03% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Sunrun Inc  vs.  Daqo New Energy

 Performance (%) 
       Timeline  
Sunrun Inc 
Sunrun Performance
0 of 100
Over the last 90 days Sunrun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2023. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Sunrun Price Channel

Daqo New Energy 
Daqo New Performance
0 of 100
Over the last 90 days Daqo New Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2023. The recent disarray may also be a sign of long period up-swing for the firm insiders.

Daqo New Price Channel

Sunrun and Daqo New Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sunrun and Daqo New

The main advantage of trading using opposite Sunrun and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunrun 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.
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The idea behind Sunrun Inc 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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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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