Correlation Between Richtech Robotics and American Superconductor

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

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

Diversification Opportunities for Richtech Robotics and American Superconductor

-0.66

Correlation Coefficient

Richtech Robotics  American Superconductor

Excellent diversification

The 3 months correlation between Richtech and American is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Richtech Robotics Class and American Superconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Superconductor and Richtech Robotics 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 Richtech Robotics Class are associated (or correlated) with American Superconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Superconductor has no effect on the direction of Richtech Robotics i.e., Richtech Robotics and American Superconductor go up and down completely randomly.

Pair Corralation between Richtech Robotics and American Superconductor

Allowing for the 90-day total investment horizon Richtech Robotics is expected to generate 2.95 times less return on investment than American Superconductor. But when comparing it to its historical volatility, Richtech Robotics Class is 1.11 times less risky than American Superconductor. It trades about 0.06 of its potential returns per unit of risk. American Superconductor is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,704  in American Superconductor on September 4, 2024 and sell it today you would earn a total of  580.00  from holding American Superconductor or generate 21.45% return on investment over 90 days.

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

Richtech Robotics Class  vs.  American Superconductor

Richtech Robotics Class

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Richtech Robotics Class has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

American Superconductor

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Superconductor are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, American Superconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Richtech Robotics and American Superconductor

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

The idea behind Richtech Robotics Class and American Superconductor 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.