Correlation Between STMicroelectronics and Canadian Solar
Can any of the company-specific risk be diversified away by investing in both STMicroelectronics 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 STMicroelectronics and Canadian Solar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMicroelectronics NV ADR and Canadian Solar, you can compare the effects of market volatilities on STMicroelectronics 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 STMicroelectronics with a short position of Canadian Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMicroelectronics and Canadian Solar.
Diversification Opportunities for STMicroelectronics and Canadian Solar
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMicroelectronics and Canadian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding STMicroelectronics NV ADR and Canadian Solar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canadian Solar and STMicroelectronics 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 STMicroelectronics NV ADR 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 STMicroelectronics i.e., STMicroelectronics and Canadian Solar go up and down completely randomly.
Pair Corralation between STMicroelectronics and Canadian Solar
Considering the 90-day investment horizon STMicroelectronics is expected to generate 1.15 times less return on investment than Canadian Solar. But when comparing it to its historical volatility, STMicroelectronics NV ADR is 1.31 times less risky than Canadian Solar. It trades about 0.05 of its potential returns per unit of risk. Canadian Solar is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 980.00 in Canadian Solar on May 23, 2025 and sell it today you would earn a total of 59.00 from holding Canadian Solar or generate 6.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STMicroelectronics NV ADR vs. Canadian Solar
Performance |
| Timeline |
| STMicroelectronics NV ADR |
| Canadian Solar |
STMicroelectronics and Canadian Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMicroelectronics and Canadian Solar
The main advantage of trading using opposite STMicroelectronics and Canadian Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMicroelectronics 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.| STMicroelectronics vs. NXP Semiconductors NV | STMicroelectronics vs. Analog Devices | STMicroelectronics vs. ON Semiconductor | STMicroelectronics vs. Lattice Semiconductor |
| Canadian Solar vs. JinkoSolar Holding | Canadian Solar vs. First Solar | Canadian Solar vs. Complete Solaria, | Canadian Solar vs. SolarEdge Technologies |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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