Correlation Between First Community and Ainsworth Game

Can any of the company-specific risk be diversified away by investing in both First Community and Ainsworth Game 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 First Community and Ainsworth Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Community Bancshares and Ainsworth Game Technology, you can compare the effects of market volatilities on First Community and Ainsworth Game 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 First Community with a short position of Ainsworth Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Community and Ainsworth Game.

Diversification Opportunities for First Community and Ainsworth Game

-0.49

Correlation Coefficient

First Community  Ainsworth Game

Very good diversification

The 3 months correlation between First and Ainsworth is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding First Community Bancshares and Ainsworth Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ainsworth Game Technology and First Community 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 First Community Bancshares are associated (or correlated) with Ainsworth Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ainsworth Game Technology has no effect on the direction of First Community i.e., First Community and Ainsworth Game go up and down completely randomly.

Pair Corralation between First Community and Ainsworth Game

Given the investment horizon of 90 days First Community Bancshares is expected to generate 0.82 times more return on investment than Ainsworth Game. However, First Community Bancshares is 1.21 times less risky than Ainsworth Game. It trades about 0.04 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about 0.02 per unit of risk. If you would invest  4,405  in First Community Bancshares on September 18, 2024 and sell it today you would earn a total of  173.00  from holding First Community Bancshares or generate 3.93% return on investment over 90 days.

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

First Community Bancshares  vs.  Ainsworth Game Technology

First Community Banc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Community Bancshares are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental drivers, First Community is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ainsworth Game Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ainsworth Game Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with First Community and Ainsworth Game

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

The idea behind First Community Bancshares and Ainsworth Game Technology 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.