Correlation Between Diodes Incorporated and Canaan
Can any of the company-specific risk be diversified away by investing in both Diodes Incorporated 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 Diodes Incorporated and Canaan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diodes Incorporated and Canaan Inc, you can compare the effects of market volatilities on Diodes Incorporated 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 Diodes Incorporated with a short position of Canaan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diodes Incorporated and Canaan.
Diversification Opportunities for Diodes Incorporated and Canaan
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Diodes and Canaan is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Diodes Incorporated and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Diodes Incorporated 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 Diodes Incorporated 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 Diodes Incorporated i.e., Diodes Incorporated and Canaan go up and down completely randomly.
Pair Corralation between Diodes Incorporated and Canaan
Given the investment horizon of 90 days Diodes Incorporated is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, Diodes Incorporated is 2.73 times less risky than Canaan. The stock trades about -0.25 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 193.00 in Canaan Inc on November 9, 2024 and sell it today you would lose (6.00) from holding Canaan Inc or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diodes Incorporated vs. Canaan Inc
Performance |
| Timeline |
| Diodes Incorporated |
| Canaan Inc |
Diodes Incorporated and Canaan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diodes Incorporated and Canaan
The main advantage of trading using opposite Diodes Incorporated and Canaan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diodes Incorporated 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.| Diodes Incorporated vs. Silicon Laboratories | Diodes Incorporated vs. MACOM Technology Solutions | Diodes Incorporated vs. FormFactor | Diodes Incorporated vs. Amkor Technology |
| Canaan vs. 3D Systems | Canaan vs. NetApp Inc | Canaan vs. Rigetti Computing | Canaan vs. Logitech International SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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