Correlation Between Skyworks Solutions and Canaan

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

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

Diversification Opportunities for Skyworks Solutions and Canaan

-0.81

Correlation Coefficient

Skyworks Solutions  Canaan

Pay attention - limited upside

The 3 months correlation between Skyworks and Canaan is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Skyworks Solutions and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Skyworks Solutions 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 Skyworks Solutions 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 Skyworks Solutions i.e., Skyworks Solutions and Canaan go up and down completely randomly.

Pair Corralation between Skyworks Solutions and Canaan

Given the investment horizon of 90 days Skyworks Solutions is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, Skyworks Solutions is 4.43 times less risky than Canaan. The stock trades about -0.11 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  91.00  in Canaan Inc on September 2, 2024 and sell it today you would earn a total of  121.00  from holding Canaan Inc or generate 132.97% return on investment over 90 days.

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

Skyworks Solutions  vs.  Canaan Inc

Skyworks Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Skyworks Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Canaan Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Canaan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Skyworks Solutions and Canaan

The main advantage of trading using opposite Skyworks Solutions and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Skyworks Solutions 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 Skyworks Solutions 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.