Correlation Between Xinyi Solar and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both Xinyi Solar and Canadian 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 Xinyi Solar and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinyi Solar Holdings and Canadian Solar, you can compare the effects of market volatilities on Xinyi Solar and Canadian 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 Xinyi Solar with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinyi Solar and Canadian Solar.
Diversification Opportunities for Xinyi Solar and Canadian Solar
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xinyi and Canadian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xinyi Solar Holdings and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Xinyi 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 Xinyi Solar Holdings are associated (or correlated) with Canadian Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canadian Solar has no effect on the direction of Xinyi Solar i.e., Xinyi Solar and Canadian Solar go up and down completely randomly.
Pair Corralation between Xinyi Solar and Canadian Solar
Assuming the 90 days horizon Xinyi Solar Holdings is expected to under-perform the Canadian Solar. But the pink sheet apears to be less risky and, when comparing its historical volatility, Xinyi Solar Holdings is 2.37 times less risky than Canadian Solar. The pink sheet trades about -0.44 of its potential returns per unit of risk. The Canadian Solar is currently generating about -0.09 of returns per unit of risk over similar time horizon. 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 |
Xinyi Solar Holdings vs. Canadian Solar
Performance |
| Timeline |
| Xinyi Solar Holdings |
| Canadian Solar |
Xinyi Solar and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xinyi Solar and Canadian Solar
The main advantage of trading using opposite Xinyi Solar and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinyi Solar position performs unexpectedly, Canadian 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 Canadian Solar will offset losses from the drop in Canadian Solar's long position.The idea behind Xinyi Solar Holdings and Canadian Solar 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.| 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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