Correlation Between Ainsworth Game and Avis Budget

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

Diversification Opportunities for Ainsworth Game and Avis Budget

-0.57

Correlation Coefficient

Ainsworth Game  Avis Budget

Excellent diversification

The 3 months correlation between Ainsworth and Avis is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Avis Budget Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avis Budget Group 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 Avis Budget. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avis Budget Group has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Avis Budget go up and down completely randomly.

Pair Corralation between Ainsworth Game and Avis Budget

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 1.96 times more return on investment than Avis Budget. However, Ainsworth Game is 1.96 times more volatile than Avis Budget Group. It trades about 0.03 of its potential returns per unit of risk. Avis Budget Group is currently generating about -0.19 per unit of risk. If you would invest  47.00  in Ainsworth Game Technology on October 26, 2024 and sell it today you would earn a total of  1.00  from holding Ainsworth Game Technology or generate 2.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Ainsworth Game Technology  vs.  Avis Budget Group

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 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.

Avis Budget Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avis Budget Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Avis Budget may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ainsworth Game and Avis Budget

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

The idea behind Ainsworth Game Technology and Avis Budget Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.