Correlation Between Ainsworth Game and Light Wonder

Can any of the company-specific risk be diversified away by investing in both Ainsworth Game and Light Wonder 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 Light Wonder 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 Light Wonder, you can compare the effects of market volatilities on Ainsworth Game and Light Wonder 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 Light Wonder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ainsworth Game and Light Wonder.

Diversification Opportunities for Ainsworth Game and Light Wonder

-0.2

Correlation Coefficient

Ainsworth Game  Light Wonder

Good diversification

The 3 months correlation between Ainsworth and Light is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Light Wonder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Light Wonder 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 Light Wonder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Light Wonder has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Light Wonder go up and down completely randomly.

Pair Corralation between Ainsworth Game and Light Wonder

Assuming the 90 days trading horizon Ainsworth Game Technology is expected to generate 1.33 times more return on investment than Light Wonder. However, Ainsworth Game is 1.33 times more volatile than Light Wonder. It trades about 0.24 of its potential returns per unit of risk. Light Wonder is currently generating about -0.09 per unit of risk. If you would invest  70.00  in Ainsworth Game Technology on September 14, 2024 and sell it today you would earn a total of  11.00  from holding Ainsworth Game Technology or generate 15.71% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  Light Wonder

Ainsworth Game Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Ainsworth Game may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Light Wonder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Light Wonder has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Ainsworth Game and Light Wonder

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

The idea behind Ainsworth Game Technology and Light Wonder 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.