Correlation Between Unisys and Daqo New

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

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

Diversification Opportunities for Unisys and Daqo New

-0.35

Correlation Coefficient

Unisys  Daqo New

Very good diversification

The 3 months correlation between Unisys and Daqo is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Unisys 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 Unisys 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 Unisys 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 Unisys i.e., Unisys and Daqo New go up and down completely randomly.

Pair Corralation between Unisys and Daqo New

Considering the 90-day investment horizon Unisys is expected to generate 0.67 times more return on investment than Daqo New. However, Unisys is 1.5 times less risky than Daqo New. It trades about -0.1 of its potential returns per unit of risk. Daqo New Energy is currently generating about -0.21 per unit of risk. If you would invest  538.00  in Unisys on February 16, 2024 and sell it today you would lose (33.00) from holding Unisys or give up 6.13% of portfolio value over 90 days.

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

Unisys  vs.  Daqo New Energy

Unisys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unisys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Daqo New Energy

Risk-Adjusted Performance

0 of 100

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 current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Unisys and Daqo New

The main advantage of trading using opposite Unisys and Daqo New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unisys 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 Unisys 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.