Correlation Between Ainsworth Game and Cosmo Metals

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

Diversification Opportunities for Ainsworth Game and Cosmo Metals

0.26

Correlation Coefficient

Ainsworth Game  Cosmo Metals

Modest diversification

The 3 months correlation between Ainsworth and Cosmo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Cosmo Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmo Metals 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 Cosmo Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmo Metals has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Cosmo Metals go up and down completely randomly.

Pair Corralation between Ainsworth Game and Cosmo Metals

Assuming the 90 days trading horizon Ainsworth Game is expected to generate 2.23 times less return on investment than Cosmo Metals. But when comparing it to its historical volatility, Ainsworth Game Technology is 1.03 times less risky than Cosmo Metals. It trades about 0.07 of its potential returns per unit of risk. Cosmo Metals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.80  in Cosmo Metals on October 8, 2024 and sell it today you would earn a total of  0.40  from holding Cosmo Metals or generate 22.22% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  Cosmo Metals

Ainsworth Game Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 2 (%) 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 February 2025.

Cosmo Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cosmo Metals 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 Cosmo Metals

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

The idea behind Ainsworth Game Technology and Cosmo Metals 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.