Correlation Between Sunworks and Canadian Solar

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

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

Diversification Opportunities for Sunworks and Canadian Solar

-0.48

Correlation Coefficient

Sunworks  Canadian Solar

Very good diversification

The 3 months correlation between Sunworks and Canadian is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sunworks and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and Sunworks 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 Sunworks 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 Sunworks i.e., Sunworks and Canadian Solar go up and down completely randomly.

Pair Corralation between Sunworks and Canadian Solar

If you would invest  162.00  in Sunworks on July 18, 2024 and sell it today you would earn a total of  0.00  from holding Sunworks or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Sunworks  vs.  Canadian Solar

Sunworks

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunworks has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sunworks is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Canadian Solar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canadian Solar has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in November 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Sunworks and Canadian Solar

The main advantage of trading using opposite Sunworks and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunworks 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 Sunworks 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.

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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.