Correlation Between Canaan and Kopin

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

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

Diversification Opportunities for Canaan and Kopin

0.27

Correlation Coefficient

Canaan  Kopin

Modest diversification

The 3 months correlation between Canaan and Kopin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and Kopin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kopin and Canaan 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 Canaan Inc are associated (or correlated) with Kopin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kopin has no effect on the direction of Canaan i.e., Canaan and Kopin go up and down completely randomly.

Pair Corralation between Canaan and Kopin

Considering the 90-day investment horizon Canaan Inc is expected to under-perform the Kopin. But the stock apears to be less risky and, when comparing its historical volatility, Canaan Inc is 1.1 times less risky than Kopin. The stock trades about -0.19 of its potential returns per unit of risk. The Kopin is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  139.00  in Kopin on December 27, 2024 and sell it today you would lose (8.00) from holding Kopin or give up 5.76% of portfolio value over 90 days.

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

Canaan Inc  vs.  Kopin

Canaan Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canaan Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Kopin

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kopin are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Kopin may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Canaan and Kopin

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

The idea behind Canaan Inc and Kopin 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 Commodity Directory module to find actively traded commodities issued by global exchanges.