Correlation Between Canaan and Credo Technology
Can any of the company-specific risk be diversified away by investing in both Canaan and Credo Technology 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 Canaan and Credo Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canaan Inc and Credo Technology Group, you can compare the effects of market volatilities on Canaan and Credo Technology 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 Canaan with a short position of Credo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaan and Credo Technology.
Diversification Opportunities for Canaan and Credo Technology
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canaan and Credo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and Credo Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credo Technology and Canaan 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 Canaan Inc are associated (or correlated) with Credo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credo Technology has no effect on the direction of Canaan i.e., Canaan and Credo Technology go up and down completely randomly.
Pair Corralation between Canaan and Credo Technology
Considering the 90-day investment horizon Canaan Inc is expected to generate 2.74 times more return on investment than Credo Technology. However, Canaan is 2.74 times more volatile than Credo Technology Group. It trades about 0.26 of its potential returns per unit of risk. Credo Technology Group is currently generating about 0.23 per unit of risk. If you would invest 125.00 in Canaan Inc on September 2, 2024 and sell it today you would earn a total of 87.00 from holding Canaan Inc or generate 69.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canaan Inc vs. Credo Technology Group
Performance |
| Timeline |
| Canaan Inc |
| Credo Technology |
Canaan and Credo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canaan and Credo Technology
The main advantage of trading using opposite Canaan and Credo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaan position performs unexpectedly, Credo Technology 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 Credo Technology will offset losses from the drop in Credo Technology's long position.| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
| Credo Technology vs. Zebra Technologies | Credo Technology vs. Ubiquiti Networks | Credo Technology vs. Ciena Corp | Credo Technology vs. Clearfield |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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