Correlation Between Canadian Solar and Emeren

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

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

Diversification Opportunities for Canadian Solar and Emeren

0.73

Correlation Coefficient

Canadian Solar  Emeren

Poor diversification

The 3 months correlation between Canadian and Emeren is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Solar and Emeren Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emeren Group 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 Emeren. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emeren Group has no effect on the direction of Canadian Solar i.e., Canadian Solar and Emeren go up and down completely randomly.

Pair Corralation between Canadian Solar and Emeren

Given the investment horizon of 90 days Canadian Solar is expected to generate 1.18 times less return on investment than Emeren. In addition to that, Canadian Solar is 1.23 times more volatile than Emeren Group. It trades about 0.11 of its total potential returns per unit of risk. Emeren Group is currently generating about 0.17 per unit of volatility. If you would invest  138.00  in Emeren Group on May 3, 2025 and sell it today you would earn a total of  47.00  from holding Emeren Group or generate 34.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Canadian Solar  vs.  Emeren Group

Canadian Solar

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 9 (%) 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.

Emeren Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Emeren Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Emeren disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canadian Solar and Emeren

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

The idea behind Canadian Solar and Emeren Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.