Correlation Between American Superconductor and Schneider Electric

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

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

Diversification Opportunities for American Superconductor and Schneider Electric

-0.28

Correlation Coefficient

American Superconductor  Schneider Electric

Very good diversification

The 3 months correlation between American and Schneider is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Schneider Electric SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schneider Electric and American Superconductor 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 American Superconductor are associated (or correlated) with Schneider Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schneider Electric has no effect on the direction of American Superconductor i.e., American Superconductor and Schneider Electric go up and down completely randomly.

Pair Corralation between American Superconductor and Schneider Electric

Given the investment horizon of 90 days American Superconductor is expected to generate 2.66 times more return on investment than Schneider Electric. However, American Superconductor is 2.66 times more volatile than Schneider Electric SE. It trades about 0.11 of its potential returns per unit of risk. Schneider Electric SE is currently generating about 0.03 per unit of risk. If you would invest  2,144  in American Superconductor on September 13, 2024 and sell it today you would earn a total of  737.00  from holding American Superconductor or generate 34.38% return on investment over 90 days.

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

American Superconductor  vs.  Schneider Electric SE

American Superconductor

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in American Superconductor are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, American Superconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Schneider Electric

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Schneider Electric SE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Schneider Electric is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with American Superconductor and Schneider Electric

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

The idea behind American Superconductor and Schneider Electric SE 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..