Correlation Between SolarEdge Technologies and Canaan

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

By analyzing existing cross correlation between SolarEdge Technologies and Canaan Inc, you can compare the effects of market volatilities on SolarEdge Technologies and Canaan 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 SolarEdge Technologies with a short position of Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of SolarEdge Technologies and Canaan.

Diversification Opportunities for SolarEdge Technologies and Canaan

-0.48

Correlation Coefficient

SolarEdge Technologies  Canaan

Very good diversification

The 3 months correlation between SolarEdge and Canaan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding SolarEdge Technologies and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and SolarEdge Technologies 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 SolarEdge Technologies are associated (or correlated) with Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of SolarEdge Technologies i.e., SolarEdge Technologies and Canaan go up and down completely randomly.

Pair Corralation between SolarEdge Technologies and Canaan

Given the investment horizon of 90 days SolarEdge Technologies is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, SolarEdge Technologies is 1.39 times less risky than Canaan. The stock trades about -0.08 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  188.00  in Canaan Inc on December 2, 2024 and sell it today you would lose (57.00) from holding Canaan Inc or give up 30.32% of portfolio value over 90 days.

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

SolarEdge Technologies  vs.  Canaan Inc

SolarEdge Technologies

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SolarEdge Technologies are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, SolarEdge Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with SolarEdge Technologies and Canaan

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

The idea behind SolarEdge Technologies and Canaan 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 Transaction History module to view history of all your transactions and understand their impact on performance.