Correlation Between American Superconductor and Quality Industrial

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

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

Diversification Opportunities for American Superconductor and Quality Industrial

0.32

Correlation Coefficient

American Superconductor  Quality Industrial

Weak diversification

The 3 months correlation between American and Quality is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Quality Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quality Industrial Corp 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 Quality Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quality Industrial Corp has no effect on the direction of American Superconductor i.e., American Superconductor and Quality Industrial go up and down completely randomly.

Pair Corralation between American Superconductor and Quality Industrial

Given the investment horizon of 90 days American Superconductor is expected to generate 0.67 times more return on investment than Quality Industrial. However, American Superconductor is 1.49 times less risky than Quality Industrial. It trades about -0.04 of its potential returns per unit of risk. Quality Industrial Corp is currently generating about -0.14 per unit of risk. If you would invest  2,520  in American Superconductor on December 29, 2024 and sell it today you would lose (580.00) from holding American Superconductor or give up 23.02% of portfolio value over 90 days.

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

American Superconductor  vs.  Quality Industrial Corp

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.

Quality Industrial Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quality Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Pair Trading with American Superconductor and Quality Industrial

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

The idea behind American Superconductor and Quality Industrial Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.