Correlation Between Canaan and Airgain

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

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

Diversification Opportunities for Canaan and Airgain

-0.66

Correlation Coefficient

Canaan  Airgain

Excellent diversification

The 3 months correlation between Canaan and Airgain is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Canaan Inc and Airgain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airgain and Canaan 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 Canaan Inc are associated (or correlated) with Airgain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airgain has no effect on the direction of Canaan i.e., Canaan and Airgain go up and down completely randomly.

Pair Corralation between Canaan and Airgain

Considering the 90-day investment horizon Canaan Inc is expected to under-perform the Airgain. In addition to that, Canaan is 1.48 times more volatile than Airgain. It trades about -0.01 of its total potential returns per unit of risk. Airgain is currently generating about 0.0 per unit of volatility. If you would invest  945.00  in Airgain on January 25, 2024 and sell it today you would lose (388.00) from holding Airgain or give up 41.06% of portfolio value over 90 days.

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

Canaan Inc  vs.  Airgain

Canaan Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canaan Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Airgain

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airgain are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Airgain reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Canaan and Airgain

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

The idea behind Canaan Inc and Airgain 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.