Correlation Between Logitech International and Canaan

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

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

Diversification Opportunities for Logitech International and Canaan

-0.67

Correlation Coefficient

Logitech International  Canaan

Excellent diversification

The 3 months correlation between Logitech and Canaan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Logitech International SA and Canaan Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canaan Inc and Logitech International 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 Logitech International SA are associated (or correlated) with Canaan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canaan Inc has no effect on the direction of Logitech International i.e., Logitech International and Canaan go up and down completely randomly.

Pair Corralation between Logitech International and Canaan

Given the investment horizon of 90 days Logitech International SA is expected to under-perform the Canaan. But the stock apears to be less risky and, when comparing its historical volatility, Logitech International SA is 6.05 times less risky than Canaan. The stock trades about -0.06 of its potential returns per unit of risk. The Canaan Inc is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Canaan Inc on September 2, 2024 and sell it today you would earn a total of  87.00  from holding Canaan Inc or generate 69.6% return on investment over 90 days.

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

Logitech International SA  vs.  Canaan Inc

Logitech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Logitech International SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Logitech International is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Canaan Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Canaan Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Canaan displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Logitech International and Canaan

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

The idea behind Logitech International SA and Canaan Inc 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.