Correlation Between Ainsworth Game and Nufarm

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

Diversification Opportunities for Ainsworth Game and Nufarm

0.18

Correlation Coefficient

Ainsworth Game  Nufarm

Average diversification

The 3 months correlation between Ainsworth and Nufarm is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Nufarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Nufarm go up and down completely randomly.

Pair Corralation between Ainsworth Game and Nufarm

Assuming the 90 days trading horizon Ainsworth Game Technology is expected to generate 1.92 times more return on investment than Nufarm. However, Ainsworth Game is 1.92 times more volatile than Nufarm. It trades about 0.01 of its potential returns per unit of risk. Nufarm is currently generating about -0.03 per unit of risk. If you would invest  101.00  in Ainsworth Game Technology on December 4, 2024 and sell it today you would lose (11.00) from holding Ainsworth Game Technology or give up 10.89% of portfolio value over 90 days.

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

Ainsworth Game Technology  vs.  Nufarm

Ainsworth Game Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Ainsworth Game unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nufarm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nufarm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Nufarm 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 Nufarm

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

The idea behind Ainsworth Game Technology and Nufarm 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.