Correlation Between Farm Pride and Ainsworth Game

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

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

Diversification Opportunities for Farm Pride and Ainsworth Game

0.34

Correlation Coefficient

Farm Pride  Ainsworth Game

Weak diversification

The 3 months correlation between Farm and Ainsworth is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods 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 Farm Pride 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 Farm Pride Foods 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 Farm Pride i.e., Farm Pride and Ainsworth Game go up and down completely randomly.

Pair Corralation between Farm Pride and Ainsworth Game

Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 1.31 times more return on investment than Ainsworth Game. However, Farm Pride is 1.31 times more volatile than Ainsworth Game Technology. It trades about 0.15 of its potential returns per unit of risk. Ainsworth Game Technology is currently generating about 0.1 per unit of risk. If you would invest  12.00  in Farm Pride Foods on December 3, 2024 and sell it today you would earn a total of  6.00  from holding Farm Pride Foods or generate 50.0% return on investment over 90 days.

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

Farm Pride Foods  vs.  Ainsworth Game Technology

Farm Pride Foods

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Farm Pride Foods are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Farm Pride unveiled solid returns over the last few months and may actually be approaching a breakup point.

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. In spite of comparatively uncertain forward indicators, Ainsworth Game unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Farm Pride and Ainsworth Game

The main advantage of trading using opposite Farm Pride and Ainsworth Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride 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 Farm Pride Foods 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.