Correlation Between Indie Semiconductor and Canadian Solar

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

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

Diversification Opportunities for Indie Semiconductor and Canadian Solar

-0.45

Correlation Coefficient

Indie Semiconductor  Canadian Solar

Very good diversification

The 3 months correlation between Indie and Canadian is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding indie Semiconductor and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Indie Semiconductor 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 indie Semiconductor are associated (or correlated) with Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Indie Semiconductor i.e., Indie Semiconductor and Canadian Solar go up and down completely randomly.

Pair Corralation between Indie Semiconductor and Canadian Solar

Given the investment horizon of 90 days indie Semiconductor is expected to generate 0.88 times more return on investment than Canadian Solar. However, indie Semiconductor is 1.14 times less risky than Canadian Solar. It trades about 0.13 of its potential returns per unit of risk. Canadian Solar is currently generating about 0.09 per unit of risk. If you would invest  421.00  in indie Semiconductor on October 10, 2024 and sell it today you would earn a total of  34.00  from holding indie Semiconductor or generate 8.08% return on investment over 90 days.

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

indie Semiconductor  vs.  Canadian Solar

indie Semiconductor

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in indie Semiconductor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Indie Semiconductor demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Canadian Solar

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Canadian Solar is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Indie Semiconductor and Canadian Solar

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

The idea behind indie Semiconductor and Canadian Solar 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.