Correlation Between Canadian Solar and Rambus

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

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

Diversification Opportunities for Canadian Solar and Rambus

-0.54

Correlation Coefficient

Canadian Solar  Rambus

Excellent diversification

The 3 months correlation between Canadian and Rambus is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Rambus Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rambus Inc 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 Rambus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rambus Inc has no effect on the direction of Canadian Solar i.e., Canadian Solar and Rambus go up and down completely randomly.

Pair Corralation between Canadian Solar and Rambus

Given the investment horizon of 90 days Canadian Solar is expected to under-perform the Rambus. In addition to that, Canadian Solar is 1.18 times more volatile than Rambus Inc. It trades about -0.04 of its total potential returns per unit of risk. Rambus Inc is currently generating about 0.01 per unit of volatility. If you would invest  5,781  in Rambus Inc on November 28, 2024 and sell it today you would lose (38.00) from holding Rambus Inc or give up 0.66% of portfolio value over 90 days.

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

Canadian Solar  vs.  Rambus Inc

Canadian Solar

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Rambus Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Rambus Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Rambus is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Canadian Solar and Rambus

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

The idea behind Canadian Solar and Rambus 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.