Correlation Between American Superconductor and Spirax Sarco

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

By analyzing existing cross correlation between American Superconductor and Spirax Sarco Engineering PLC, you can compare the effects of market volatilities on American Superconductor and Spirax Sarco 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 Spirax Sarco. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Superconductor and Spirax Sarco.

Diversification Opportunities for American Superconductor and Spirax Sarco

-0.5

Correlation Coefficient

American Superconductor  Spirax Sarco

Very good diversification

The 3 months correlation between American and Spirax is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Spirax Sarco Engineering PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirax Sarco Enginee 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 Spirax Sarco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirax Sarco Enginee has no effect on the direction of American Superconductor i.e., American Superconductor and Spirax Sarco go up and down completely randomly.

Pair Corralation between American Superconductor and Spirax Sarco

Given the investment horizon of 90 days American Superconductor is expected to under-perform the Spirax Sarco. In addition to that, American Superconductor is 2.76 times more volatile than Spirax Sarco Engineering PLC. It trades about -0.16 of its total potential returns per unit of risk. Spirax Sarco Engineering PLC is currently generating about 0.28 per unit of volatility. If you would invest  4,328  in Spirax Sarco Engineering PLC on September 13, 2024 and sell it today you would earn a total of  540.00  from holding Spirax Sarco Engineering PLC or generate 12.48% return on investment over 90 days.

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

American Superconductor  vs.  Spirax Sarco Engineering PLC

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.

Spirax Sarco Enginee

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spirax Sarco Engineering PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Spirax Sarco is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Superconductor and Spirax Sarco

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

The idea behind American Superconductor and Spirax Sarco Engineering PLC 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.