Correlation Between American Superconductor and IHI Corp
Can any of the company-specific risk be diversified away by investing in both American Superconductor and IHI Corp 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 IHI Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Superconductor and IHI Corp ADR, you can compare the effects of market volatilities on American Superconductor and IHI Corp 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 IHI Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Superconductor and IHI Corp.
Diversification Opportunities for American Superconductor and IHI Corp
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and IHI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and IHI Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IHI Corp ADR 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 IHI Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IHI Corp ADR has no effect on the direction of American Superconductor i.e., American Superconductor and IHI Corp go up and down completely randomly.
Pair Corralation between American Superconductor and IHI Corp
Given the investment horizon of 90 days American Superconductor is expected to under-perform the IHI Corp. In addition to that, American Superconductor is 1.81 times more volatile than IHI Corp ADR. It trades about -0.17 of its total potential returns per unit of risk. IHI Corp ADR is currently generating about -0.13 per unit of volatility. If you would invest 1,485 in IHI Corp ADR on September 12, 2024 and sell it today you would lose (141.00) from holding IHI Corp ADR or give up 9.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Superconductor vs. IHI Corp ADR
Performance |
| Timeline |
| American Superconductor |
| IHI Corp ADR |
American Superconductor and IHI Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Superconductor and IHI Corp
The main advantage of trading using opposite American Superconductor and IHI Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Superconductor position performs unexpectedly, IHI Corp 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 IHI Corp will offset losses from the drop in IHI Corp's long position.| American Superconductor vs. Nel ASA | American Superconductor vs. Graham | American Superconductor vs. Watts Water Technologies | American Superconductor vs. CVD Equipment |
| IHI Corp vs. Xinjiang Goldwind Science | IHI Corp vs. American Superconductor | IHI Corp vs. Cummins | IHI Corp vs. Aquagold International |
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.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |