Correlation Between Wisekey International and Canaan

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

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

Diversification Opportunities for Wisekey International and Canaan

0.44

Correlation Coefficient

Wisekey International  Canaan

Very weak diversification

The 3 months correlation between Wisekey and Canaan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Wisekey International Holding and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Wisekey International 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 Wisekey International Holding 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 Wisekey International i.e., Wisekey International and Canaan go up and down completely randomly.

Pair Corralation between Wisekey International and Canaan

Given the investment horizon of 90 days Wisekey International Holding is expected to generate 3.25 times more return on investment than Canaan. However, Wisekey International is 3.25 times more volatile than Canaan Inc. It trades about 0.33 of its potential returns per unit of risk. Canaan Inc is currently generating about 0.36 per unit of risk. If you would invest  197.00  in Wisekey International Holding on September 18, 2024 and sell it today you would earn a total of  748.00  from holding Wisekey International Holding or generate 379.7% return on investment over 90 days.

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

Wisekey International Holding  vs.  Canaan Inc

Wisekey International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wisekey International Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wisekey International showed solid returns over the last few months and may actually be approaching a breakup point.

Canaan Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Canaan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wisekey International and Canaan

The main advantage of trading using opposite Wisekey International and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wisekey International 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 Wisekey International Holding 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.