Correlation Between Canadian Solar and Ichor Holdings

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

By analyzing existing cross correlation between Canadian Solar and Ichor Holdings, you can compare the effects of market volatilities on Canadian Solar and Ichor Holdings 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 Ichor Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and Ichor Holdings.

Diversification Opportunities for Canadian Solar and Ichor Holdings

-0.18

Correlation Coefficient

Canadian Solar  Ichor Holdings

Good diversification

The 3 months correlation between Canadian and Ichor is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Ichor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Holdings 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 Ichor Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Holdings has no effect on the direction of Canadian Solar i.e., Canadian Solar and Ichor Holdings go up and down completely randomly.

Pair Corralation between Canadian Solar and Ichor Holdings

Given the investment horizon of 90 days Canadian Solar is expected to under-perform the Ichor Holdings. In addition to that, Canadian Solar is 1.42 times more volatile than Ichor Holdings. It trades about -0.04 of its total potential returns per unit of risk. Ichor Holdings is currently generating about 0.17 per unit of volatility. If you would invest  2,832  in Ichor Holdings on August 30, 2024 and sell it today you would earn a total of  431.00  from holding Ichor Holdings or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Canadian Solar  vs.  Ichor Holdings

Canadian Solar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Canadian Solar may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Ichor Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Ichor Holdings may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Canadian Solar and Ichor Holdings

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

The idea behind Canadian Solar and Ichor Holdings 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..