Correlation Between Canaan and Ehang Holdings

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

By analyzing existing cross correlation between Canaan Inc and Ehang Holdings, you can compare the effects of market volatilities on Canaan and Ehang Holdings 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 Ehang Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canaan and Ehang Holdings.

Diversification Opportunities for Canaan and Ehang Holdings

0.62

Correlation Coefficient

Canaan  Ehang Holdings

Poor diversification

The 3 months correlation between Canaan and Ehang is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and Ehang Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ehang Holdings 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 Ehang Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ehang Holdings has no effect on the direction of Canaan i.e., Canaan and Ehang Holdings go up and down completely randomly.

Pair Corralation between Canaan and Ehang Holdings

Considering the 90-day investment horizon Canaan Inc is expected to generate 2.67 times more return on investment than Ehang Holdings. However, Canaan is 2.67 times more volatile than Ehang Holdings. It trades about 0.05 of its potential returns per unit of risk. Ehang Holdings is currently generating about -0.04 per unit of risk. If you would invest  60.00  in Canaan Inc on May 6, 2025 and sell it today you would earn a total of  5.00  from holding Canaan Inc or generate 8.33% 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.  Ehang Holdings

Canaan Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Canaan displayed solid returns over the last few months and may actually be approaching a breakup point.

Ehang Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ehang Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Canaan and Ehang Holdings

The main advantage of trading using opposite Canaan and Ehang Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canaan position performs unexpectedly, Ehang Holdings 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 Ehang Holdings will offset losses from the drop in Ehang Holdings' long position.

The idea behind Canaan Inc and Ehang Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..