Correlation Between Canon and Canaan

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

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

Diversification Opportunities for Canon and Canaan

0.0

Correlation Coefficient

Canon  Canaan

Pay attention - limited upside

The 3 months correlation between Canon and Canaan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Canon Inc and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Canon 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 Canon Inc are associated (or correlated) with Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of Canon i.e., Canon and Canaan go up and down completely randomly.

Pair Corralation between Canon and Canaan

If you would invest  248.00  in Canaan Inc on September 4, 2024 and sell it today you would lose (34.00) from holding Canaan Inc or give up 13.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Canon Inc  vs.  Canaan Inc

Canon Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canon Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Canon is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Canaan Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Canaan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canon and Canaan

The main advantage of trading using opposite Canon and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canon position performs unexpectedly, Canaan 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 Canaan will offset losses from the drop in Canaan's long position.

The idea behind Canon Inc and Canaan Inc 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.

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 the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.