Correlation Between American Superconductor and Atlas Copco

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

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

Diversification Opportunities for American Superconductor and Atlas Copco

-0.05

Correlation Coefficient

American Superconductor  Atlas Copco

Good diversification

The 3 months correlation between American and Atlas is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Atlas Copco AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Copco AB 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 Atlas Copco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Copco AB has no effect on the direction of American Superconductor i.e., American Superconductor and Atlas Copco go up and down completely randomly.

Pair Corralation between American Superconductor and Atlas Copco

Given the investment horizon of 90 days American Superconductor is expected to under-perform the Atlas Copco. In addition to that, American Superconductor is 2.84 times more volatile than Atlas Copco AB. It trades about -0.07 of its total potential returns per unit of risk. Atlas Copco AB is currently generating about 0.07 per unit of volatility. If you would invest  1,598  in Atlas Copco AB on December 2, 2024 and sell it today you would earn a total of  149.00  from holding Atlas Copco AB or generate 9.32% 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.  Atlas Copco AB

American Superconductor

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Superconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Atlas Copco AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Copco AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Atlas Copco may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with American Superconductor and Atlas Copco

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

The idea behind American Superconductor and Atlas Copco AB 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.