Correlation Between Canadian Solar and Annexon

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

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

Diversification Opportunities for Canadian Solar and Annexon

0.75

Correlation Coefficient

Canadian Solar  Annexon

Poor diversification

The 3 months correlation between Canadian and Annexon is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon 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 Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Canadian Solar i.e., Canadian Solar and Annexon go up and down completely randomly.

Pair Corralation between Canadian Solar and Annexon

Given the investment horizon of 90 days Canadian Solar is expected to generate 1.49 times less return on investment than Annexon. But when comparing it to its historical volatility, Canadian Solar is 1.3 times less risky than Annexon. It trades about 0.11 of its potential returns per unit of risk. Annexon is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Annexon on May 4, 2025 and sell it today you would earn a total of  64.00  from holding Annexon or generate 35.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Canadian Solar  vs.  Annexon

Canadian Solar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain forward indicators, Canadian Solar reported solid returns over the last few months and may actually be approaching a breakup point.

Annexon

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Annexon are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Annexon showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Solar and Annexon

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

The idea behind Canadian Solar and Annexon 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.