Correlation Between MongoDB and Daqo New

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

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

Diversification Opportunities for MongoDB and Daqo New

0.18

Correlation Coefficient

MongoDB  Daqo New

Average diversification

The 3 months correlation between MongoDB and Daqo is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding MongoDB 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 MongoDB 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 MongoDB 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 MongoDB i.e., MongoDB and Daqo New go up and down completely randomly.

Pair Corralation between MongoDB and Daqo New

Considering the 90-day investment horizon MongoDB is expected to under-perform the Daqo New. But the stock apears to be less risky and, when comparing its historical volatility, MongoDB is 1.17 times less risky than Daqo New. The stock trades about -0.19 of its potential returns per unit of risk. The Daqo New Energy is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  2,711  in Daqo New Energy on March 14, 2024 and sell it today you would lose (648.00) from holding Daqo New Energy or give up 23.9% of portfolio value over 90 days.

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

MongoDB  vs.  Daqo New Energy

MongoDB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MongoDB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Daqo New Energy

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with MongoDB and Daqo New

The main advantage of trading using opposite MongoDB and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MongoDB 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 MongoDB 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.