Correlation Between ISun and Canadian Solar

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

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

Diversification Opportunities for ISun and Canadian Solar

0.44

Correlation Coefficient

ISun  Canadian Solar

Very weak diversification

The 3 months correlation between ISun and Canadian is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding ISun Inc and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and ISun 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 ISun Inc 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 ISun i.e., ISun and Canadian Solar go up and down completely randomly.

Pair Corralation between ISun and Canadian Solar

If you would invest  1,225  in Canadian Solar on September 3, 2024 and sell it today you would earn a total of  16.00  from holding Canadian Solar or generate 1.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

ISun Inc  vs.  Canadian Solar

ISun Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ISun Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ISun is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Canadian Solar

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Canadian Solar are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating forward indicators, Canadian Solar may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ISun and Canadian Solar

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

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.