Correlation Between Canaan and Seagate Technology

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

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

Diversification Opportunities for Canaan and Seagate Technology

0.21

Correlation Coefficient

Canaan  Seagate Technology

Modest diversification

The 3 months correlation between Canaan and Seagate is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and Seagate Technology PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seagate Technology PLC 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 Seagate Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seagate Technology PLC has no effect on the direction of Canaan i.e., Canaan and Seagate Technology go up and down completely randomly.

Pair Corralation between Canaan and Seagate Technology

Considering the 90-day investment horizon Canaan Inc is expected to under-perform the Seagate Technology. In addition to that, Canaan is 2.95 times more volatile than Seagate Technology PLC. It trades about -0.2 of its total potential returns per unit of risk. Seagate Technology PLC is currently generating about 0.03 per unit of volatility. If you would invest  8,583  in Seagate Technology PLC on December 29, 2024 and sell it today you would earn a total of  167.00  from holding Seagate Technology PLC or generate 1.95% return on investment over 90 days.

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

Canaan Inc  vs.  Seagate Technology PLC

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.

Seagate Technology PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Seagate Technology PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Seagate Technology is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Canaan and Seagate Technology

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

The idea behind Canaan Inc and Seagate Technology PLC 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.