Correlation Between Ainsworth Game and SGS SA

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

Diversification Opportunities for Ainsworth Game and SGS SA

0.6

Correlation Coefficient

Ainsworth Game  SGS SA

Poor diversification

The 3 months correlation between Ainsworth and SGS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and SGS SA go up and down completely randomly.

Pair Corralation between Ainsworth Game and SGS SA

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 2.56 times more return on investment than SGS SA. However, Ainsworth Game is 2.56 times more volatile than SGS SA. It trades about 0.02 of its potential returns per unit of risk. SGS SA is currently generating about -0.15 per unit of risk. If you would invest  55.00  in Ainsworth Game Technology on September 26, 2024 and sell it today you would earn a total of  0.00  from holding Ainsworth Game Technology or generate 0.0% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  SGS SA

Ainsworth Game Technology

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Ainsworth Game is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SGS SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ainsworth Game and SGS SA

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

The idea behind Ainsworth Game Technology and SGS SA 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.