Correlation Between Canadian Solar and Xinyi Solar
Can any of the company-specific risk be diversified away by investing in both Canadian Solar and Xinyi 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 Canadian Solar and Xinyi Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Solar and Xinyi Solar Holdings, you can compare the effects of market volatilities on Canadian Solar and Xinyi 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 Canadian Solar with a short position of Xinyi Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Solar and Xinyi Solar.
Diversification Opportunities for Canadian Solar and Xinyi Solar
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Canadian and Xinyi is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Xinyi Solar Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinyi Solar Holdings and Canadian Solar 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 Canadian Solar are associated (or correlated) with Xinyi Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinyi Solar Holdings has no effect on the direction of Canadian Solar i.e., Canadian Solar and Xinyi Solar go up and down completely randomly.
Pair Corralation between Canadian Solar and Xinyi Solar
Given the investment horizon of 90 days Canadian Solar is expected to generate 2.37 times more return on investment than Xinyi Solar. However, Canadian Solar is 2.37 times more volatile than Xinyi Solar Holdings. It trades about -0.09 of its potential returns per unit of risk. Xinyi Solar Holdings is currently generating about -0.44 per unit of risk. If you would invest 1,551 in Canadian Solar on August 28, 2024 and sell it today you would lose (244.00) from holding Canadian Solar or give up 15.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Solar vs. Xinyi Solar Holdings
Performance |
| Timeline |
| Canadian Solar |
| Xinyi Solar Holdings |
Canadian Solar and Xinyi Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Solar and Xinyi Solar
The main advantage of trading using opposite Canadian Solar and Xinyi Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Solar position performs unexpectedly, Xinyi 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 Xinyi Solar will offset losses from the drop in Xinyi Solar's long position.| Canadian Solar vs. Maxeon Solar Technologies | Canadian Solar vs. SolarEdge Technologies | Canadian Solar vs. Sunnova Energy International | Canadian Solar vs. Enphase Energy |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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