Correlation Between Ainsworth Game and Evolution Gaming

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

Diversification Opportunities for Ainsworth Game and Evolution Gaming

0.21

Correlation Coefficient

Ainsworth Game  Evolution Gaming

Modest diversification

The 3 months correlation between Ainsworth and Evolution is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ainsworth Game Technology and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Ainsworth Game i.e., Ainsworth Game and Evolution Gaming go up and down completely randomly.

Pair Corralation between Ainsworth Game and Evolution Gaming

Assuming the 90 days horizon Ainsworth Game Technology is expected to generate 3.36 times more return on investment than Evolution Gaming. However, Ainsworth Game is 3.36 times more volatile than Evolution Gaming Group. It trades about 0.16 of its potential returns per unit of risk. Evolution Gaming Group is currently generating about -0.36 per unit of risk. If you would invest  47.00  in Ainsworth Game Technology on September 24, 2024 and sell it today you would earn a total of  7.00  from holding Ainsworth Game Technology or generate 14.89% 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.  Evolution Gaming 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.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ainsworth Game and Evolution Gaming

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

The idea behind Ainsworth Game Technology and Evolution Gaming 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.