Correlation Between American Superconductor and Capstone Green

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

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

Diversification Opportunities for American Superconductor and Capstone Green

0.59

Correlation Coefficient

American Superconductor Capstone Green

Very weak diversification

The 3 months correlation between American and Capstone is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding American Superconductor and Capstone Green Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capstone Green Energy 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 Capstone Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capstone Green Energy has no effect on the direction of American Superconductor i.e., American Superconductor and Capstone Green go up and down completely randomly.

Pair Corralation between American Superconductor and Capstone Green

Given the investment horizon of 90 days American Superconductor is expected to generate 1.21 times more return on investment than Capstone Green. However, American Superconductor is 1.21 times more volatile than Capstone Green Energy. It trades about 0.09 of its potential returns per unit of risk. Capstone Green Energy is currently generating about 0.04 per unit of risk. If you would invest  335.00  in American Superconductor on December 26, 2022 and sell it today you would earn a total of  76.00  from holding American Superconductor or generate 22.69% return on investment over 90 days.

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

American Superconductor  vs.  Capstone Green Energy

American Superconductor

American Performance

6 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in American Superconductor are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, American Superconductor exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capstone Green Energy

Capstone Performance

3 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Capstone Green Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Capstone Green may actually be approaching a critical reversion point that can send shares even higher in April 2023.

Pair Trading with American Superconductor and Capstone Green

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

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The idea behind American Superconductor and Capstone Green Energy 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.