Correlation Between Arteris and Canaan

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

Diversification Opportunities for Arteris and Canaan

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Arteris and Canaan is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Arteris and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Arteris 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 Arteris 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 Arteris i.e., Arteris and Canaan go up and down completely randomly.

Pair Corralation between Arteris and Canaan

Considering the 90-day investment horizon Arteris is expected to generate 2.16 times less return on investment than Canaan. But when comparing it to its historical volatility, Arteris is 2.02 times less risky than Canaan. It trades about 0.11 of its potential returns per unit of risk. Canaan Inc is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  102.00  in Canaan Inc on October 8, 2024 and sell it today you would earn a total of  130.00  from holding Canaan Inc or generate 127.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Arteris  vs.  Canaan Inc

 Performance 
       Timeline  
Arteris 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Arteris are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward indicators, Arteris reported solid returns over the last few months and may actually be approaching a breakup point.
Canaan Inc 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 13 (%) 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.

Arteris and Canaan Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arteris and Canaan

The main advantage of trading using opposite Arteris and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arteris 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 Arteris 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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