Correlation Between Resolute Forest and Ainsworth Game

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

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

Diversification Opportunities for Resolute Forest and Ainsworth Game

0.49

Correlation Coefficient

Resolute Forest  Ainsworth Game

Very weak diversification

The 3 months correlation between Resolute and Ainsworth is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Resolute Forest Products 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 Resolute Forest 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 Resolute Forest Products 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 Resolute Forest i.e., Resolute Forest and Ainsworth Game go up and down completely randomly.

Pair Corralation between Resolute Forest and Ainsworth Game

If you would invest  2,192  in Resolute Forest Products on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Resolute Forest Products or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.19%
Values	Daily Returns

Resolute Forest Products  vs.  Ainsworth Game Technology

Resolute Forest Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Resolute Forest Products has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Resolute Forest is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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.

Pair Trading with Resolute Forest and Ainsworth Game

The main advantage of trading using opposite Resolute Forest and Ainsworth Game positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resolute Forest 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 Resolute Forest Products 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.