Correlation Between Weichai Power and American Superconductor
Can any of the company-specific risk be diversified away by investing in both Weichai Power 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 Weichai Power and American Superconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Weichai Power Co and American Superconductor, you can compare the effects of market volatilities on Weichai Power 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 Weichai Power with a short position of American Superconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weichai Power and American Superconductor.
Diversification Opportunities for Weichai Power and American Superconductor
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Weichai and American is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Weichai Power Co and American Superconductor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Superconductor and Weichai Power 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 Weichai Power Co 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 Weichai Power i.e., Weichai Power and American Superconductor go up and down completely randomly.
Pair Corralation between Weichai Power and American Superconductor
If you would invest 2,452 in American Superconductor on September 1, 2024 and sell it today you would earn a total of 954.00 from holding American Superconductor or generate 38.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
Weichai Power Co vs. American Superconductor
Performance |
| Timeline |
| Weichai Power |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| American Superconductor |
Weichai Power and American Superconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weichai Power and American Superconductor
The main advantage of trading using opposite Weichai Power and American Superconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weichai Power 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.| Weichai Power vs. Xinjiang Goldwind Science | Weichai Power vs. Shanghai Electric Group | Weichai Power vs. American Superconductor | Weichai Power vs. Cummins |
| American Superconductor vs. Nel ASA | American Superconductor vs. Graham | American Superconductor vs. Watts Water Technologies | American Superconductor vs. CVD Equipment |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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