Correlation Between Ainsworth Game and EP Financial

Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and EP Financial 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 Ainsworth Game and EP Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ainsworth Game Technology and EP Financial Group, you can compare the effects of market volatilities on Ainsworth Game and EP Financial 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 Ainsworth Game with a short position of EP Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and EP Financial.

Diversification Opportunities for Ainsworth Game and EP Financial

0.07

Correlation Coefficient

Ainsworth Game  EP Financial

Significant diversification

The 3 months correlation between Ainsworth and EP1 is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and EP Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EP Financial Group and Ainsworth Game 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 Ainsworth Game Technology are associated (or correlated) with EP Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EP Financial Group has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and EP Financial go up and down completely randomly.

Pair Corralation between Ainsworth Game and EP Financial

Assuming the 90 days trading horizon Ainsworth Game is expected to generate 4.26 times less return on investment than EP Financial. In addition to that, Ainsworth Game is 1.27 times more volatile than EP Financial Group. It trades about 0.01 of its total potential returns per unit of risk. EP Financial Group is currently generating about 0.04 per unit of volatility. If you would invest  50.00  in EP Financial Group on September 25, 2024 and sell it today you would earn a total of  2.00  from holding EP Financial Group or generate 4.0% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  EP Financial Group

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Ainsworth Game is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EP Financial Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EP Financial Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, EP Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Ainsworth Game and EP Financial

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

The idea behind Ainsworth Game Technology and EP Financial Group 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.