Correlation Between Collins Foods and Ainsworth Game

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

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

Diversification Opportunities for Collins Foods and Ainsworth Game

0.01

Correlation Coefficient

Collins Foods  Ainsworth Game

Significant diversification

The 3 months correlation between Collins and Ainsworth is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Collins Foods and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology and Collins Foods 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 Collins Foods are associated (or correlated) with Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of Collins Foods i.e., Collins Foods and Ainsworth Game go up and down completely randomly.

Pair Corralation between Collins Foods and Ainsworth Game

Assuming the 90 days trading horizon Collins Foods is expected to under-perform the Ainsworth Game. But the stock apears to be less risky and, when comparing its historical volatility, Collins Foods is 2.59 times less risky than Ainsworth Game. The stock trades about -0.33 of its potential returns per unit of risk. The Ainsworth Game Technology is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  71.00  in Ainsworth Game Technology on September 13, 2024 and sell it today you would earn a total of  10.00  from holding Ainsworth Game Technology or generate 14.08% return on investment over 90 days.

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

Collins Foods  vs.  Ainsworth Game Technology

Collins Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Collins Foods and Ainsworth Game

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

The idea behind Collins Foods and Ainsworth Game Technology 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.