Correlation Between Ainsworth Game and CVW CleanTech

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

Diversification Opportunities for Ainsworth Game and CVW CleanTech

-0.23

Correlation Coefficient

Ainsworth Game  CVW CleanTech

Very good diversification

The 3 months correlation between Ainsworth and CVW is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and CVW CleanTech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CleanTech 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 CVW CleanTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CleanTech has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and CVW CleanTech go up and down completely randomly.

Pair Corralation between Ainsworth Game and CVW CleanTech

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 0.87 times more return on investment than CVW CleanTech. However, Ainsworth Game Technology is 1.15 times less risky than CVW CleanTech. It trades about 0.1 of its potential returns per unit of risk. CVW CleanTech is currently generating about -0.01 per unit of risk. If you would invest  49.00  in Ainsworth Game Technology on December 6, 2024 and sell it today you would earn a total of  12.00  from holding Ainsworth Game Technology or generate 24.49% return on investment over 90 days.

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

Ainsworth Game Technology  vs.  CVW CleanTech

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 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ainsworth Game reported solid returns over the last few months and may actually be approaching a breakup point.

CVW CleanTech

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVW CleanTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, CVW CleanTech is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ainsworth Game and CVW CleanTech

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

The idea behind Ainsworth Game Technology and CVW CleanTech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.