Correlation Between Canadian Solar and Aehr Test

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

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

Diversification Opportunities for Canadian Solar and Aehr Test

-0.09

Correlation Coefficient

Canadian Solar  Aehr Test

Good diversification

The 3 months correlation between Canadian and Aehr is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Aehr Test Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aehr Test Systems and Canadian Solar 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 Canadian Solar are associated (or correlated) with Aehr Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aehr Test Systems has no effect on the direction of Canadian Solar i.e., Canadian Solar and Aehr Test go up and down completely randomly.

Pair Corralation between Canadian Solar and Aehr Test

Given the investment horizon of 90 days Canadian Solar is expected to under-perform the Aehr Test. But the stock apears to be less risky and, when comparing its historical volatility, Canadian Solar is 1.84 times less risky than Aehr Test. The stock trades about -0.02 of its potential returns per unit of risk. The Aehr Test Systems is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  1,234  in Aehr Test Systems on October 8, 2024 and sell it today you would earn a total of  493.00  from holding Aehr Test Systems or generate 39.95% return on investment over 90 days.

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

Canadian Solar  vs.  Aehr Test Systems

Canadian Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Aehr Test Systems

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aehr Test Systems are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Aehr Test reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Solar and Aehr Test

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

The idea behind Canadian Solar and Aehr Test Systems 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 Global Correlations module to find global opportunities by holding instruments from different markets.