Correlation Between Ainsworth Game and Advanced Micro

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

Diversification Opportunities for Ainsworth Game and Advanced Micro

0.61

Correlation Coefficient

Ainsworth Game  Advanced Micro

Poor diversification

The 3 months correlation between Ainsworth and Advanced is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Advanced Micro Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Micro Devices 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 Advanced Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Micro Devices has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Advanced Micro go up and down completely randomly.

Pair Corralation between Ainsworth Game and Advanced Micro

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 1.17 times more return on investment than Advanced Micro. However, Ainsworth Game is 1.17 times more volatile than Advanced Micro Devices. It trades about -0.03 of its potential returns per unit of risk. Advanced Micro Devices is currently generating about -0.07 per unit of risk. If you would invest  55.00  in Ainsworth Game Technology on September 12, 2024 and sell it today you would lose (5.00) from holding Ainsworth Game Technology or give up 9.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Ainsworth Game Technology  vs.  Advanced Micro Devices

Ainsworth Game Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ainsworth Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Advanced Micro Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Ainsworth Game and Advanced Micro

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

The idea behind Ainsworth Game Technology and Advanced Micro Devices 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.